Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

BUDGET DAY (CITY OF LONDON)

Mr. Grant-Ferris: On a point of order. Owing to the fact that it is quite impossible for one Member of Parliament to be in two places at the same time, would you, Mr. Speaker, care to rule that the City of London will lose none of its privileges by reason of the fact that you occupy a higher place than is normal today?

Mr. Speaker: I do not so rule, because it is the House which confers the privileges, and only the House can take them away, but I am obliged to the hon. Gentleman for his courtesy.

PRIVATE BUSINESS

ROYAL EXCHANGE ASSURANCE BILL

Read the Third time and passed.

LANCASHIRE COUNTY COUNCIL (INDUSTRIAL DEVELOPMENT, ETC.) BILL

As amended, to be considered Tomorrow.

DERBYSHIRE COUNTY COUNCIL BILL [Lords]

NORTHAMPTON COUNTY COUNCIL BILL [Lords]

Read a Second time and committed.

Oral Answers to Questions — PENSIONS AND NATIONAL INSURANCE

Home Confinement Grant

Mrs. Castle: asked the Minister of Pensions and National Insurance whether he will amend the regulations relating to the home confinement grant in order to make it payable in all cases where the mother is discharged from hospital immediately after the birth of her child and so is involved in as great an outlay in respect of her confinement as if her child had been delivered at home.

The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter): No, Sir. The home confinement grant is intended to meet the extra costs of having the baby at home, and is not appropriate when arrangements have been made some time beforehand for the mother to have it in a National Health Service hospital. Maternity grant is, of course, payable in the circumstances described in the Question.

Mrs. Castle: Is the Minister aware that in the Blackburn case, details of which I sent to his hon. Friend, the mother had to go to hospital—

Mr. Speaker: Order, I should be much obliged if hon. Members engaging in conversation, if they must converse, would so so more quietly.

Mrs. Castle: Is the Minister aware that in the Blackburn case, details of which I sent to his hon. Friend, the mother had to go into hospital at a week's notice for the delivery of her child, that she was discharged the day after the birth of her baby, and thus incurred all the normal additional expense of a home confinement, including the loss of her husband's wages, because he had to stay at home to look after her? Will the Minister ask the National Insurance Advisory Committee to look again at these emergency regulations in regard to the payment of these grants in emergency cases?

Mr. Boyd-Carpenter: I am aware of the case, on which the hon. Lady wrote to my right hon. Friend. I do not think this affects the principle, particularly as the House will recall that in these cases the full maternity grant of £12 10s. is payable, and that all that was missed was the £5 which turns on having the baby at home, which this lady did not do.

National Insurance Fund

Mr. Houghton: asked the Minister of Pensions and National Insurance whether he will take steps under the provisions of Section 36 (4) of the National Insurance Act, 1946, to transfer such sums from the National Insurance (Reserve) Fund as may be necessary to increase National Insurance benefits by 10s. a week immediately and pending the next review of contribution rates and amounts of benefit provided for in Section 40 of the National Insurance Act, 1946.

Mr. Boyd-Carpenter: No, Sir.

Mr. Houghton: Is the right hon. Gentleman aware that the last quinquennial review was in 1954? Will he confirm that we may expect another one soon? If so, why cannot the enormous reserve in this fund be used to tide over, between now and consideration of the next quinquennial review, an increase in pensions to an amount which would enable retirement pensioners at least to carry on on a decent standard of life?

Mr. Boyd-Carpenter: I think the last part of the hon. Gentleman's supplementary question arises on his next

Question. On the first part, I understand that the Government Actuary is well forward with his work.

Mr. Houghton: asked the Minister of Pensions and National Insurance to what extent the need to increase benefits without increasing contributions and Exchequer grants is among the contingencies for which the National Insurance Fund balances are being maintained at over £350 million and the national Insurance (Reserve) Fund at over £1,160 million; and for what other purposes these funds are maintained at such a high level.

Mr. Boyd-Carpenter: As the hon. Member is aware, National Insurance is on a contributory basis, and it would be wholly inconsistent with this to provide for a permanent increase in benefits to be financed by using up the accumulated reserves of the Funds. These are, in any event, far too small relative to expenditure to enable this to be done for any length of time. The main function of the Funds is to provide a contingency reserve against temporary fluctuations of benefit expenditure, for example in the case of epidemics, and to provide some relief to contributions out of the interest paid on the moneys in these Funds.

Mr. Houghton: Is the right hon. Gentleman aware that, in paragraphs 174 and 175 of the Phillips Report, it was suggested that this enormous reserve Fund could be justified more to meet an unemployment emergency than anything else? Is it the right hon. Gentleman's opinion that that is the real justification for this enormous reserve? If not, why cannot it be used to tide over an increase in current benefits?

Mr. Boyd-Carpenter: I think that it has never been previously suggested that it should be used for this purpose. It is far too small. The best summary of this is in the Government Actuary's Report for 1950–51 to the hon. Gentleman's right hon. Friend.

Retirement and Old-age Pensioners

Mr. Willis: asked the Minister of Pensions and National Insurance how many old-age pensioners in Scotland were in receipt of payments from the National Assistance Board at the latest available date.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Patricia Hornsby-Smith): I am informed by the National Assistance Board that at 29th March, 1960, 76,200 weekly assistance grants were being paid in Scotland as supplements to retirement pensions and 11,548 as supplements to non-contributory old-age pensions. Some of the grants provided for a household with more than one pensioner.

Mr. Willis: Is the right hon. Lady aware that this great pool of relative poverty is considered by most people in Scotland to be a disgrace? When will the Government do something to improve the position of these people?

Miss Hornsby-Smith: That is another question.

Mr. Prentice: asked the Minister of Pensions and National Insurance what increase would be required in the single rate of retirement pension so that it would represent the same proportion of the average earnings of employed persons as it did when the existing pension rates were established over two years ago.

Mr. Boyd-Carpenter: For men, 3s. 10d., and for women, 4s. 2d.

Mr. Prentice: For how long is the gap between the standard of living of the pensioner and that of the rest of the community to be allowed to grow? Will not the right hon. Gentleman agree that the present standard of living has been built up very largely by the hard work and sacrifices in the past of those who have now retired? When will the Government stop making these stale excuses and raise the standard of living of the pensioner?

Mr. Boyd-Carpenter: The hon. Member knows perfectly well that the answer to questions of that sort depends on the base dates selected. If I were to select October, 1951, the picture would be the opposite.

Mr. Willis: asked the Minister of Pensions and National Insurance what would be the total cost of increasing the old-age pension sufficiently to enable pensioners to enjoy the same increase in living standards as has been enjoyed by wage earners since 1946.

Mr. Boyd-Carpenter: I am afraid that no calculation on the lines suggested by the hon. Member is possible.

Mr. Willis: Is the right hon. Gentleman aware that it would be a very considerable sum? When do the Government propose to implement the Prime Minister's promise that pensioners should properly share in the increasing productivity of the country?

Mr. Boyd-Carpenter: That does not arise out of this Question.

Mrs. Cullen: asked the Minister of Pensions and National Insurance what would be the cost of raising the present single retirement pension by 10s. 6d.

Mr. Boyd-Carpenter: About £120 millions a year, but rather more than £200 millions a year if other benefits were increased correspondingly.

Mrs. Cullen: asked the Minister of Pensions and National Insurance how many old-age pensioners are in receipt of National Assistance in the City of Glasgow at the latest available date.

Mr. Hannan: asked the Minister of Pensions and National Insurance how many retirement pensioners there are in the city of Glasgow; and what proportion of these are in receipt of National Assistance supplementation.

Miss Hornsby-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas, and it follows that it is not possible to state the percentage of pensions supplemented by national assistance. I am informed by the National Assistance Board that 24,894 weekly National Assistance grants supplementing retirement pensions and 1,989 supplementing non-contributory old-age pensions were being paid on 29th March, 1960, in the City of Glasgow and some adjoining areas served by the Board's offices in the City. Some of the grants provided for households with more than one pensioner.

Mrs. Cullen: Is that reply not sufficient evidence to prove that the retirement pension is quite inadequate? What does the Minister propose doing about; it? [HON. MEMBERS: "Answer".]

Mr. McInnes: As the Minister is not disposed to answer that supplementary


question, I wonder whether she would be good enough to indicate what percentage the 24,000 represents of the whole?

Miss Hornsby-Smith: If the hon. Member would like to put down that Question, I should be pleased to find him the information.

Mr. Gourlay: asked the Minister of Pensions and National Insurance how many persons in Kirkcaldy were in receipt of retirement pensions, and how many were receiving supplementary allowances, at the latest available date.

Miss Hornsby-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas. I am informed by the National Assistance Board that at 29th March, 1960, 2,852 weekly National Assistance grants paid as supplements to retirement pensions were current in the area served by the Board's office in Kirkcaldy: it includes the Burgh of Kirkcaldy but extends beyond it. Some of the grants provided for the requirements of a household with more than one pensioner.

Mr. Gourlay: First, does not the right hon. Lady consider that the numbers in receipt of supplementary allowances from the National Assistance Board merit an immediate increase in the old-age pension?
Secondly, does she agree with the statement of the hon. Member for Basingstoke (Mr. Denzil Freeth), who, in this House on 15th December, said:
… I do not believe that our industrial recovery has yet taken place to a sufficient extent to have created the necessary wealth to enable an increase in pensions to be made."— [OFFICIAL REPORT, 15th December. 1959; Vol. 615, c. 1260.]
Thirdly, is the Minister prepared to leave the old-age pensioner in a state of perpetual despair?

Miss Hornsby-Smith: The hon. Member's Question asked for statistics, which have been given. The supplementary questions which he now asks deal with quite another matter.

Several Hon. Members rose—

Mr. Speaker: There is some difficulty here. The Minister cannot be asked to comment on the observations of some

unofficial Member. There is some difficulty about quoting. I think that we had better get on.

Mr. Hector Hughes: asked the Minister of Pensions and National Insurance what steps he has taken this winter to ascertain the cost of living and to collect other relevant evidence in order to relate it to pensions on the one hand and National Assistance on the other hand now payable to old-age pensioners; what conclusions he has now reached based on that evidence; and what steps he now plans in order to increase the pensions and allowances.

Mr. Boyd-Carpenter: As the hon. and learned Member is aware, I keep the levels of retirement pension under review in the light, inter alia, of changes in the cost of living. So far as National Assistance is concerned, the National Assistance Board, whose officers are in close touch with applicants for assistance throughout the country, is under a statutory duty to keep the levels of National Assistance under review. So far as the last part of the hon. and learned Gentleman's Question is concerned, I have nothing to add to what I said in the debate on 16th March.

Mr. Hughes: As the Minister says that he keeps the situation continually under review, he must be aware that the present pensions are inadequate for the purpose intended. Will the right hon. Gentleman look into the matter with a view to seeing that they are made adequate for the pensioners' purposes, having regard to the budget they they have to face every week?

Mr. Boyd-Carpenter: We had a long debate the other day on the question of adequacy or inadequacy which I do not propose to summarise. I can say, however, that the pension is worth more today than at any time before January. 1958.

Mr. Houghton: Can the Minister tell the House when his review will be concluded? Is this an interminable process, or will it come to an end at some time? What we are trying to ascertain is what the Minister proposes to do, and when.

Mr. Boyd-Carpenter: The hon. Member knows that it has been the responsibility of my predecessor, now Lord Ingleby, and myself to keep these


matters under review. Between us, we have served the pensioner better than any other Administration.

Mr. Bence: asked the Minister of Pensions and National Insurance by how much the retirement pension would have to be increased, at the present time, to give that pension the same increase in purchasing power that has taken place in salaries, wages, and incomes derived from dividends and capital gains, respectively.

Mr. Boyd-Carpenter: I am afraid it is quite impossible to make the calculation which the hon. Member requests.

Mr. Bence: That is a great pity. Would not the right hon. Gentleman agree that most hon. Members and people working in industry and commerce owe a great deal to what has been done in the past and, therefore, are in part inheritors of the past? Would not he agree that it is justifiable to do something to see that this disinherited section of the population, the old people, share in some of that inheritance?

Mr. Boyd-Carpenter: The hon. Gentleman asks me to make a calculation which it is impossible to make, and I have told him so. I do not think it is for me to comment on the results of a calculation which I cannot make.

Mr. Mendelson: asked the Minister of Pensions and National Insurance by how much the rate of the present retirement pension would require to be increased to give it an increased purchasing power over that of the 1946 pension equal in proportion to the increase that has accrued over the same period in the rent, interest, and dividend category of income.

Mr. Boyd-Carpenter: The formula suggested by the hon. Member would mean that the single retirement pension would have to be reduced by about 2s. 2d. [Laughter.]

Mr. Mendelson: Is the right hon. Gentleman aware that, in contrast to any calculation which he cannot make, on calculations which I and some experts in this field have made, we come to an increase of 5s. 4d.? Would not he agree that it is the particular duty of his Department to see that, beyond raising a laugh over this serious and grave

matter, the old-age pensioners have some approximation in sharing the prosperity which other people enjoy?

Mr. Boyd-Carpenter: I cannot take responsibility for the way in which the hon. Member frames his Question. I have given him an answer to it.

Mr. Woodburn: asked the Minister of Pensions and National Insurance if he will publish in the OFFICIAL REPORT a sample weekly budget of a single retired person in receipt of the retirement pension of 50s. plus National Assistance supplementation.

Mrs. Hart: asked the Minister of Pensions and National Insurance when he last carried out a survey of the weekly budgets of families in receipt of National Assistance; in which areas the survey was carried out; how large were the samples taken; and whether he will publish the results in the form of a White Paper.

Mr. Millan: asked the Minister of Pensions and National Insurance whether he will carry out a survey of the budgets of retirement pensioners in receipt of National Assistance.

Mr. Boyd-Carpenter: The initiative in proposing changes in scale rates of National Assistance has been placed by Parliament with the National Assistance Board. It has never been the Board's practice to publish detailed household budgets laying down the way in which the payments it makes can or should be spent; nor in view of the variety of personal circumstances would any useful purpose be served by it doing so. The Board does, of course, keep in close and continuous touch with the needs and circumstances of the people for whom it cares; and the hon. Lady the Member for Lanark (Mrs. Hart) may be interested to know that the Board's officers pay some 6 million visits a year to the homes of the people they help.

Mr. Woodburn: Would the Minister place in some part of this building samples of the diets which it is possible to obtain from this income, because I am quite sure that hon. Members would be shocked to see how little is available for a person to live on?

Mr. Boyd-Carpenter: For the reason I gave in my main Answer, which I think the right hon. Gentleman will fully


appreciate, it is impossible to lay down a general proposition of this sort regardless of circumstances and the part of the country in which the people live. As the right hon. Gentleman knows, my right hon. Friend the Minister of Agriculture, Fisheries and Food publishes a very helpful and deeply analysed food survey which deals specially with the pensioner group.

Mrs. Hart: Is the Minister aware that in the National Food Survey, to which he has referred, figures are given only of the average consumpton of food by old-age pensioners; that this average is shown to be the lowest amount spent by any category of the population; and that it reveals that there must be a large number of people who are on an inadequate diet? In view of this, will not the Minister initiate inquiries so that we may know the results and whether or not he is justified in his refusal to increase pensions and allowances?

Mr. Boyd-Carpenter: If the hon. Lady would study the National Food Survey, she would see that it is based on a close and detailed analysis which it would be quite wrong to complicate or to add to.

Mr. Millan: Is the right hon. Gentleman aware that his reluctance to take any independent action in this matter will be widely interpreted as an admission of the complete inadequacy of the present level of retirement pensions?

Mr. Boyd-Carpenter: As the hon. Gentleman will see, in all three of these Questions the determinant is the scale of National Assistance and not National Insurance benefits.

Mrs. Hart: Is the Minister aware that in the National Food Survey there are published the average budgets of a sample of 720,000 old-age pensioners? In answering an earlier Question today, the right hon. Gentleman has already said that there are over one-tenth of that number in Scotland alone in receipt of National Assistance. Does not that show the utter inadequacy of the National Food Survey to reveal the position?

Mr. Boyd-Carpenter: I cannot relate the fact that a certain number of retirement pensioners draw supplementary pensions to any indication whatever that the National Food Survey is other than accurate and reliable.

Miss Herbison: asked the Minister of Pensions and National Insurance how many persons in receipt of retirement pension in the area covered by the National Assistance Board office in Motherwell are having their pension supplemented by National Assistance; and what percentage this represents of all retirement pensioners in that area.

Miss Hornsby-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas and it follows that it is not possible to state the percentage of pensions supplemented by National Assistance. I am, however, informed by the National Assistance Board that at 29th March, 1960, 2,091 weekly National Assistance grants were being paid to retirement pensioners in the area served by the Board's Motherwell office. Some of the grants provided for a household with more than one pensioner.

Miss Herbison: When the Minister was studying the answers to these Questions, was she not filled with alarm and despair that so many of our old people are on the very verge of poverty? What does she intend to do about it? Should not she make a strong case to the Government for an immediate increase in pensions and, if they do not give an immediate increase, should not she resign as a protest? Surely, as a woman, she must realise the heartbreak which these old people are suffering?

Miss Hornsby-Smith: The hon. Lady and her colleagues forget that one reason why there are more applicants receiving supplementary pensions is that the rates are far higher under this Government than under their Government.

Miss Herbison: Is the right hon. Lady aware that so many old people are receiving supplementary pensions because her Government refuse to raise the basic pension?

Miss Hornsby-Smith: The basic pension has been raised three times by this Government, in striking contrast to the record of the Government of the party opposite.

Miss Herbison: asked the Minister of Pensions and National Insurance how many persons in receipt of retirement pension in the area covered by the


National Assistance Board office in Motherwell have received a grant for personal clothing or household goods during the past year.

Miss Hornsby-Smith: I am informed by the National Assistance Board that the information available about grants of National Assistance to meet an exceptional need, which are mainly grants for clothing, does not distinguish retirement pensioners from the other recipients of assistance to whom they are made.

Miss Herbison: Would it not have been possible to give the number of grants generally given and, if these figures were given, again would it not prove not only that retirement pensioners but the chronic sick and the long-term unemployed—such as we have in Scotland—have to have recourse very often to the National Assistance Board because the scales of payment are so inadequate—and may we know what the right hon. Lady is whispering?

Hon. Members: Answer.

Miss Hornsby-Smith: If the hon. Lady wants details of grants generally and will be obliging enough to put down a Question, I will provide her with the Answer.

Mr. T. Brown: Is the right hon. Lady aware that a large number of people who apply to the National Assistance Board for clothing or household goods are being referred to the W.V.S., which is doing magnificent work, but that I do not think the Board is doing what is right in placing an intolerable burden on a voluntary organisation? Has not the Board some responsibility to meet the requirements of these old people who need clothing and household goods?

Miss Hornsby-Smith: I am sure the hon. Member would not wish it to be thought that he does not feel that the Board is honouring its duties in this matter. I am sure that the Board considers sympathetically all applications for the additional and exceptional grants which come before it. If the hon. Member has any particular cases in mind where he feels that the need has not been met under the Regulations, I shall be very happy, to look into them.

Mr. Hector Hughes: asked the Minister of Pensions and National Insurance how many people in the city and county of Aberdeen, respectively, are now in receipt of retirement pensions; and how many are in receipt of supplementary allowances.

Miss Hornsby-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas. I am informed by the National Assistance Board that the city of Aberdeen is served by two offices, one of which also serves most of the county of Aberdeen and a part of Kincardineshire, the rest of the county of Aberdeen being served by an office at Peterhead. It is not therefore possible to give the numbers of National Assistance supplements to retirement pensions as asked for. The number at 29th March, 1960, for the whole of the area served by the three offices was 3,851. Some of the grants provided for a household with more than one pensioner.

Mr. Hughes: As to the first part of the Answer, does not the fact that these figures are not available show that the statement by the Minister that he keeps the situation under constant review is not accurate? Why are the figures not forthcoming? Might not the fact that the later figures are so large prove that the pensions are inadequate? Will the Minister take steps to rectify this deplorable state of affairs?

Miss Hornsby-Smith: If the hon. and learned Member had listened to my reply, I think he would appreciate that the geography of the constituency does not necessarily coincide with the area served by the offices. That is our difficulty. We have fully accurate national and regional records, but it is not possible to give the exact figures for hon. Members' constituencies.

Mr. Houghton: Is there any real difficulty about this? It is surely of social and national importance that we should see the relationship between National Assistance payments and the number of retirement pensioners in particular areas? Could the right hon. Lady take steps to produce something along the lines for which we ask in these various Questions?

Miss Hornsby-Smith: I am sure that the hon. Member, with his vast experience of pensions, will appreciate that it is both more efficient and more economical that pensions should be, as he knows, paid centrally from Newcastle whereas the National Assistance Board supplements are dealt with locally.

Mr. Hughes: In view of the unsatisfactory Answer to this Question and the Answer to my Question No. 12 earlier today, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment, especially in view of the inadequate debate we had recently on pensions.

Mr. George Craddock: asked the Minister of Pensions and National Insurance what is the total number of persons in Bradford at present in receipt of retirement pensions; and what is the number receiving such pensions supplemented by National Assistance.

Miss Hornsby-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas. I am, however, informed by the National Assistance Board that on 29th March, 1960, 6,959 weekly National Assistance grants were being paid to retirement pensioners in the area served by the Board's offices in Bradford. This area comprises practically the whole of the city and some small adjoining areas. Some of the grants provided for a household with more than one pensioner.

Mr. Craddock: Does the right hon. Lady not think it astonishing that we cannot have these small figures for places up and down the country? Does it not prove that a large number of people are receiving National Assistance and that they should have the substantial increase which is necessary on their basic pension?

Mr. Woodburn: asked the Minister of Pensions and National Insurance his estimate of the number of persons who, for reasons of sickness, unemployment, or age, are unable to earn, and who are living without any income supplementation on the £2 10s. single, or £4 married, insurance benefit or retirement pension.

Dr. Mabon: asked the Minister of Pensions and National Insurance what is his estimate of the number of persons

whose total income is such as would enable them to qualify for National Assistance supplementation, but who have not made application for such National Assistance.

Mr. Boyd-Carpenter: I have no figures on which to base such estimates, but I have no reason to think that the numbers are large.

Mr. Woodburn: While they may not be large, is not the right hon. Gentleman aware that perhaps the greatest hardship exists among those people who, perhaps foolishly, are too proud to ask for assistance? Is there any way he can think of by which they can be assisted, because there is great hardship among them?

Mr. Boyd-Carpenter: As the right hon. Member knows, the National Assistance Board and my Department have made very considerable efforts to meet any such reluctance as may remain. The change in the name on the pension books is one. I shall be glad of his help and the help of all hon. Members in eliminating any such feeling which, as he says, is all the more tragic for being unnecessary.

Dr. Mabon: Is the right hon. Gentle-man aware that his opinion is not shared by many concerned with social service— doctors, ministers of religion, and so on? Will he arrange to take some sampling process on the basis of the techniques used in the National Food Survey to make more precise estimates of those who come into this unfortunate category?

Mr. Boyd-Carpenter: I think we should be far better engaged, if we discover such people, in persuading them to take themselves out of the category.

Mr. Hoy: asked the Minister of Pensions and National Insurance by how much, in terms of 1946 prices, the single retirement pension exceeded or fell below a purchasing power of £1 6s. in each of the years from 1952 to 1957.

Mr. Lawson: asked the Minister of Pensions and National Insurance by how much, and for how long, the single retirement pension exceeded a value of £1 6s., expressed in 1946 prices, during the period from October, 1952, to October, 1957.

Mr. Ross: asked the Minister of Pensions and National Insurance in which years, as at October, from 1952 to 1957, the value of the single retirement pension exceeded £1 6s., in terms of 1946 prices; and by how much.

Mr. Boyd-Carpenter: As the Answer consists of a table of figures, I will, with permission, circulate it in the OFFICIAL REPORT. In reply to the hon. Member for Motherwell (Mr. Lawson), the pension was worth more than 26s. in terms of 1946 prices from May, 1955, to February, 1956, by amounts varying up to about 1s. 4d.

Mr. Hoy: Would not a comparison with the period mentioned in my Question and the Answer the Minister gave about a week or ten days ago for the same class of pensioner for the years 1958–59, show that this class of pensioner has not been doing so well out of this "never had it so good" period? Would the Minister be prepared to take a little action to give some increased benefits to this class of pensioner?

Mr. Boyd-Carpenter: As the hon. Member has pointed out, the figures show a very appreciable increase in respect of the past two years.

Mr. Lawson: Do not the figures show that, as the Minister said, only for a few months during those years the maximum by which the figures exceeded 26s. was 1s. 4d.? Is 1s. 4d. much to brag about as to what has been done in those years?

Mr. Boyd-Carpenter: As the hon. Member will be aware, the interest of the pensioner is not the past rate but the present one—[HON. MEMBERS: "Hear, hear."]—and it is that which, for some reason or other, he and his hon. Friends excluded from this Question.

Mr. Ross: Is the Minister aware that the pensioners are certainly interested in the figures but in relation to the present position they are completely disgusted, not only by the figures but by the obduracy of the Minister in refusing to face the fact that an increase is necessary and refusing to give it to them?

Mr. Boyd-Carpenter: I think the hon. Member is wholly wrong, not only in his assessment of the position, but also,

as he was not long ago, in his assessment of public opinion.

Following are the figures:


Month
Value at October, 1946 prices
Amount in excess of or below, 26s. at October, 1946 prices




s.
d.
s.
d.


October, 1952
…
23
7
—2
5


October, 1953
…
23
2
—2
10


October, 1954
…
22
7
—3
5


October, 1955
…
26
5
+
5


October, 1956
…
25
5
—
7


October, 1957
…
24
4
—1
8

Dr. Mabon: asked the Minister of Pensions and National Insurance by how much the present single retirement pension of £2 10s. would require to be increased to give it the same increase in purchasing power over the 1946 pension of £1 6s., as has been attained by the rise in income from dividends over the same period.

Mr. Boyd-Carpenter: About 5s. 3d., if the calculation is based on a comparison of the total dividends on ordinary and preference shares, other than those for companies now nationalised, for 1946 and 1959.

Dr. Mabon: In view of that Answer, can the right hon. Gentleman tell us whether he has honoured his election promise made in 1959? Can he now tell us by his demeanour whether the Chancellor means to raise pensions this afternoon?

Mr. Boyd-Carpenter: I think that when the hon. Member studies his Question and my Answer he will see that it is not very useful to compare an individual scale of pension with a total amount of other payments made to an unspecified but increasing number of people.

Miss Bacon: asked the Minister of Pensions and National Insurance if he is aware that women retirement pensioners, working part-time in domestic employment and in factories, find it impossible to satisfy the 12-hour rule and take full advantage of the increase in the earnings allowed; and if he will amend the law to put right this anomaly.

Mr. Boyd-Carpenter: I would refer the hon. Lady to what I said on this subject during the debate on the Earnings Regulations on 15th February.

Miss Bacon: Is the right hon. Gentleman aware that it is no use making speeches unless something is done about this matter? Is he aware that a great deal of confusion and no uniform practice exists because two women working next to each other can be treated differently for retirement purposes? Is he also aware that very few women in the country can take full advantage of the £3 10s. rule and keep within the 12-hour rule?

Mr. Boyd-Carpenter: As I said in the speech to which I referred the hon. Lady, this is an important and serious point. The point I made was that we should require, as the Advisory Committee suggested, to see how this rule was affected by the earnings limits. These came into operation only on 21st March and we must have a little time to follow them out.

Miss Bacon: Is the right hon. Gentleman aware that, although the rate has only just come into operation, some women have had their pension books withdrawn? I have sent one to him as an example.

Mr. Boyd-Carpenter: The hon. Lady will appreciate that this problem derives not from any specific action of this Government but from the construction placed by the ultimate statutory authorities on the National Insurance Act, 1946.

Mr. Speaker: Mr. Pavitt.

Mr. Houghton: Is the Minister aware—

Mr. Speaker: Order. I called the next Question, by misfortune, before I saw the hon. Member for Sowerby (Mr. Houghton) rise.

Mr. Pavitt: asked the Minister of Pensions and National Insurance by how much in terms of 1946 prices the present value of the single retirement pension exceeds the value of the same pension in May 1955, taking into account the withdrawal of the cheap tobacco concession.

Mr. Boyd-Carpenter: In terms of 1946 prices, the single retirement pension

in payment today exceeds the value of that in payment in May 1955 by 2s. 4d. Allowing for the value of tobacco tokens in the case of those pensioners who smoked, the excess is 9d.

Mr. Pavitt: Is the Minister aware that 400 old people wished to see him and the Parliamentary Secretary here on the 21st March to discuss the inadequacy of the present pension and that, with the help of six of my colleagues on this side of the House, I was able to cater for them in Committee Rooms 14 and 10, the two largest Committee Rooms in the House, in order to try to give some answer to their present difficulties? Will the Minister, together with the Parliamentary Secretary, meet these 400 of my constituents if they again come to the House?

Mr. Boyd-Carpenter: I cannot make individual appointments at Question Time across the Floor of the House.

Mr. Lawson: asked the Minister of Pensions and National Insurance what proportion of the cost of the contributory old-age pension in 1938 was met by the Exchequer; what proportion of the retirement pension was so met in 1958; and what is the estimated Exchequer proportion of the retirement pension in 1962.

Mr. Ross: asked the Minister of Pensions and National Insurance what proportion of the contributory old-age pension in 1938 was paid for by means of contributions; what proportion of the retirement pension was so paid in 1958; and what is the estimated proportion that will be so paid for in 1962.

Mr. Boyd-Carpenter: It is not possible to isolate Exchequer payments or contributions for particular benefits under the Contributory Pensions and National Insurance schemes, since all receipts are paid into a single account from which the cost of all benefits is met. In the year ending 31st March, 1938, Exchequer payments and contribution receipts were, respectively, about 31 per cent. and 69 per cent. of the expenditure from the Pensions Accounts under the Contributory Pensions Acts, and 14 per cent. and 79 per cent. of the expenditure of the National Insurance Fund in the year ended 31st March, 1958. In 1961–62 it is estimated that the proportions will be about 17 per cent. and 79 per cent.

Mr. Lawson: It is rather difficult to understand what those percentages mean. May I take it that there has been a process, which is likely to continue, of shifting the cost of paying for the old-age pension and retirement pension from the Exchequer to the shoulders of the contributor?

Mr. Boyd-Carpenter: I sympathise with the hon. Member in his difficulty, but he asked for percentages and I had to give them. In terms of cash the figures are £14·6 million in 1938, just over £100 million in 1958 and about £170 million in 1962, which I think is the reverse of what the hon. Member was forecasting.

Mr. Lawson: I asked for percentages deliberately, but in his reply the Minister mixed the percentage from the contributor with the percentage from the Exchequer. I asked for one of them. Could I have separately the percentage which has been paid by the Exchequer and not by the contributor?

Mr. Boyd-Carpenter: I have given the hon. Member both percentages. I think he might study them.

Mr. Small: asked the Minister of Pensions and National Insurance if he will state the amount by which the retirement pension would require to be raised to produce a basic pension equal to one third of the average adult male earnings.

Mr. Boyd-Carpenter: For a married man, by 10s. 3d.

Mr. Small: On a point of order. I could not hear the answer.

Mr. Speaker: Order. I cannot imagine why hon. Members interpret the process of being quiet in such strange terms today. Would the Minister be good enough to repeat his answer?

Mr. Boyd-Carpenter: I will try again. The answer is, for a married man, by 10s. 3d.

Mr. Small: Does the Minister realise that the comparability of wage rates has been basic recently with reference to the railways? Does he not agree that a modest 10s. 3d. is not an unreasonable target? Will he support such a claim?

Mr. Boyd-Carpenter: That raises, again, a matter with which I dealt at some length on 16th March. I do not propose to add anything to it today.

Mr. G. M. Thomson: asked the Minister of Pensions and National Insurance how many persons in the city of Dundee are in receipt of retirement pensions; and how many were receiving National Assistance grants at the last available date.

Miss Horns by-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas. I am informed by the National Assistance Board that on 29th March, 1960, 3,467 weekly National Assistance grants were being paid to retirement pensioners in the area, extending beyond the city, which is served by the Board's offices in Dundee. Some of the grants provided for a household with more than one pensioner.

Mr. Thomson: Is the Minister aware that that is a disgracefully high figure in a community of under 200,000 people? Does it not show that amidst the general prosperity of the country very real poverty is being suffered by the old-age pensioners? What do the Government intend to do about it?

Miss Hornsby-Smith: It is certainly not an abnormally high percentage.

Mr. G. M. Thomson: asked the Minister of Pensions and National Insurance what increase would be required in the retirement pension for a single person to make the percentage increase since it was last raised equal the percentage increase in income from rents during the same period.

Mr. Boyd-Carpenter: About 2s. 6d., based on a comparison between the total income from rents during 1958 and during 1959—the latest figures available.

Mr. Thomson: While thanking the Minister for that answer, may I ask whether it does not show clearly that this is a Government which looks after the landlords and neglects the old-age pensioners?

Mr. Boyd-Carpenter: The fallacy of that argument is borne out by the fact that the rent figures include a very substantial amount in respect of local authority rents.

Mr. Dempsey: asked the Minister of Pensions and National Insurance what savings would be effected in National Assistance by the raising of the retirement pension to a level in excess of the National Assistance scale of allowances.

Mr. Boyd-Carpenter: The extent of the saving would depend on the extent of the increase in retirement pension rates: for each 1s. a week it would come to roughly £3 million a year on the assumption that no change in National Assistance scales was made.

Mr. Dempsey: Does the Minister realise that that is quite a saving? Would he consider looking again at that policy, because, in addition to effecting that saving, he would be getting rid of one of the worst means tests which besets one of the most deserving sections of the community.

Mr. Boyd-Carpenter: The difficulty is that it would be a saving based on the fact that the whole transaction would give nothing at all to the poorest sections of the community.

Mr. Dempsey: asked the Minister of Pensions and National Insurance what was the value of the single retirement pension as at 1st February, 1958, in terms of 1946 prices.

Mr. Boyd-Carpenter: It was 30s. 2d. on the basis of the Retail Prices Index and the Cost of Living Index which preceded it.

Mr. Dempsey: Is the Minister aware that every time we receive the figures the value of the pension in relation to 1946 prices has deteriorated? Is he aware that according to recent information it has deteriorated even further in 1960? Does he not think that it is time the old-age pensioner was given a better deal and a living pension?

Mr. Boyd-Carpenter: I do not know what figures the hon. Member has seen, because the Retail Prices Index has been extremely stable.

Mr. Lipton: Is the Minister aware that most of the Questions which he and his right hon. Friend have tried somewhat ineffectively to answer today would be quite unnecessary if, before the day is out, the Chancellor of the Exchequer announced that he would give another 10s. a week to old-age pensioners?

Mr. Boyd-Carpenter: I can imagine no contingency which would deter the hon. Member from putting down Questions.

Mr. Manuel: asked the Minister of Pensions and National Insurance how many old-age pensioners in the county of Ayr are receiving National Assistance.

Miss Hornsby-Smith: I am informed by the National Assistance Board that on 29th March, 1960, 5,781 weekly National Assistance grants supplementing retirement pensions and 690 supplementing non-contributory old age pensions were being paid in the area covered by the Board's offices in the county of Ayr, which serve the whole of the county and parts of Renfrewshire and Buteshire. Some of the grants provided for a household with more than one pensioner.

Mr. Manuel: Does not the right hon. Member think that this is a shocking figure for the County of Ayr—the county in which Burns set down his earliest yearnings for a better mankind and a better brotherhood for the world? Is the right hon. Gentleman aware that over 6,000 people are unemployed in Ayrshire and that therefore the resilience of the economy to help our old people is much weakened? Is not this proof positive that the Government ought to be taking steps to help these poverty-stricken old-age pensioners out of the very sad conditions in which they are living today?

Miss Hornsby-Smith: I am sure the hon. Member agrees that under this Government both the old-age pensions and the allowances have been enhanced—

Mr. Manuel: No.

Miss Hornsby-Smith: — and further—

Mr. Manuel: Read Burns.

Mr. Speaker: Order. There may be some hon. Member who wants to listen to the answer.

Miss Hornsby-Smith: The hon. Member is as well aware as we are that when there has been an increase in pensions, the first claim has been that it should not be offset through those on National Assistance losing all of it.

Sir T. Moore: Can my right hon. Friend estimate how many old-age pensioners would be receiving National Assistance today if old-age pensions had not been increased three times by the present Government and the cost of living steadied under the present Government instead of rocketing upwards as it did under the previous Labour Government?

Dr. A. Thompson: asked the Minister of Pensions and National Insurance what is the number of retirement pensioners in the Dunfermline area; what proportion is in receipt of National Assistance supplementation; and what is the average amount of such supplementation.

Miss Hornsby-Smith: Statistics relating to the numbers of retirement pensioners are not available for particular areas, and it follows that it is not possible to state the percentage of pensions supplemented by National Assistance. I am informed by the National Assistance Board that information about the average amount of National Assistance grants is not available for particular areas, but that on 29th March, 1960, 1,770 weekly grants were being paid to retirement pensioners in the area served by the Board's office in Dunfermline. Some of the grants provided for a household with more than one pensioner.

Dr. Thompson: Can the Minister give me an undertaking that these statistics will be collected in future for individual areas in order to meet, in the coming months, the persistent, unremitting and single-minded concern of my hon. Friends and I for the plight of old-age pensioners, in contrast to the silence and indifference which, according to today's Order Paper, is displayed on the benches opposite?

Miss Hornsby-Smith: If the hon. Member considers the fact that pensions are paid through highly complicated machinery which is centred at Newcastle, he will realise that it would be a waste of public money to set up organisations to collect figures on the different geographical areas combined in indvidual constituencies. I cannot give the undertaking for which he asks.

Mr. Eden: By asking such questions as this and trying to seek such information, will not my hon. Friend agree that

hon. Gentlemen opposite do the greatest disservice to those who draw National Assistance? After all, is it not the fact that by means of National Assistance we can best be assured that the money is paid to those who are genuinely in need of it?

Mr. Houghton: Is there really any difficulty about supplying this information? The proportion of National Assistance payments to retirement pensioners in particular localities may be of great importance. It may show manifestations of social change or maldistribution of national prosperity, from which useful conclusions can be drawn. Is the hon. Lady aware that it would not require regional organisation? All that it requires is information, and the Ministry of Pensions and National Insurance should be able to supply information.

Miss Hornsby-Smith: I have a great respect for the hon. Member's knowledge of pensions organisation, but I think that on reflection he will appreciate that the whole national set-up for dealing with pensions, if it were broken up into the peculiar ramifications of the areas of individual constituencies, would place a great burden and a great cost on the public purse.

Mr. J. Griffiths: Will the right hon. Lady ask the approximately 250 local advisory committees of the Ministry of National Insurance whether they have these figures available? If they have, they should make them available to her so that she can tell the House.

Miss Hornsby-Smith: I am sure that the right hon. Gentleman realises that, if they were available, it would be through our organisation, but they are not available for the areas which have been dealt with in the Questions put this afternoon.

Mr. J. Griffiths: Local advisory committees are perfectly entitled to ask for the figures. I should be very surprised if they do not ask for them and do not have them available.

Mrs. Slater: Is the right hon. Lady aware that these figures are of extreme importance for the people within the various areas? The only reason for asking these Questions is to try to find out from the Government just how much


they value the needs of the old-age pensioners? Is the right hon. Lady further aware that her hon. Friend the Member for Bournemouth, West (Mr. Eden) was very anxious to receive the same figures when we were discussing the Pensions Bill in Committee?

Miss Hornsby-Smith: I am sure that the hon. Lady is aware that the advisory committee areas do not coincide with the constituency areas. Further, I am sure that it was in the interests of efficiency that the former Labour Government introduced the centralisation of pensions records at Newcastle.

Miss Herbison: On a point of order, Mr. Speaker. Owing to the sorry and lamentable picture—[Interruption.] I repeat, owing to the sorry and lamentable picture—

Mr. Speaker: I hope the hon. Lady will state what her point of order is.

Miss Herbison: With due deference, to you, Mr. Speaker, I am coming to my point of order. It is that because of this picture of the plight of the old people that has been painted by the Answers to all these Questions today, and the cold callousness—[Interruption.] —where these people are concerned, and, again, I say—[Interruption.]—the cold callousness of the Ministers—

Mr. Speaker: The hon. Lady will have heard me on more than one occasion ask that hon. Members desirous of giving notice to raise matters on the Adjournment should use the usual formula, otherwise we get this sort of din and waste of time.

Miss Herbison: Then, Mr. Speaker, for the reasons I have stated, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.

Pneumoconiosis, Stoke-on-Trent

Dr. Stross: asked the Minister of Pensions and National Insurance how many cases of pneumoconiosis have been diagnosed by the pneumoconiosis board in Stoke-on-Trent for the years 1956, 1957, 1958, and 1959.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. W. M. F. Vane): The

numbers of cases of pneumoconiosis found by the Stoke-on-Trent panel during the calendar years 1956, 1957, 1958 were 1,436, 1,267 and 516, respectively. During the nine months ending September, 1959, the latest date for which figures are available, 170 cases were diagnosed. Since the area served by the Stoke-on-Trent Panel was reduced, when a new Panel was opened at Birmingham in March, 1958, the figures for 1958 and 1959 are not comparable with those for previous years.

Dr. Stross: Would it be true to say that in the last two years there has been a very sharp decline in the number of cases of pneumoconiosis diagnosed? Is it also true to say that mass X-ray, to which three out of every four adults in Stoke-on-Trent have subjected themselves, has contributed in case finding and thus to this very sharp fall in the total number?

Mr. Vane: I think that that is so. After an intensive campaign, such as that to which the hon. Member has referred, it is understandable that there would first be a rise in the number of cases diagnosed and thereafter a fall.

Mr. T. Brown: Is the Joint Parliamentary Secretary satisfied with the methods adopted at pneumoconiosis and silicosis panels in examining men? We are getting various complaints that men are not being examined as they should be. Will the hon. Member make some inquiries about the methods adopted in the examination of these men? In the cases reported, men have not been two minutes in the examination room before being declared not to be sufferers from this disease.

Mr. Vane: I am sure that, in general, the medical examinations are all that they ought to be, but if the hon. Member has any particular cases which he would like me to look into, I hope that he will let me have them.

Mr. Brown: It is the duty of the Department to make inquiries when complaints have been made either from this side or from that side of the House. The Department knows very well that these complaints are being made very regularly.

Graduated Contributions (Regulations)

Mr. Bellenger: asked the Minister of Pensions and National Insurance when the draft regulations for the collection of graduated contributions under Pay As You Earn will be submitted to the House for approval.

Mr. Boyd-Carpenter: Before the end of this month, I hope to submit a preliminary draft of the regulations to the National Insurance Advisory Committee. When I have considered its report, I shall lay the regulations, and the report, before Parliament.

UNION OF SOUTH AFRICA (REFUGEES)

Mr. Parker: asked the Prime Minister what facilities on United Kingdom or Colonial Territory have been provided for refugees from the Union of South Africa.

The Secretary of State for the Home Department (Mr. R. A. Butler): I have been asked to reply.
British subjects and British protected persons are free to enter and remain in the United Kingdom. Admission to Colonial Territories is governed by the immigration legislation in force in each territory.

Mr. Parker: Arising from that Answer, may I ask whether the Government will bear in mind that both sides of the House wish to maintain the traditional right of asylum for political refugees, at least up to the standards which we gave to the refugees from Hungary and from pre-war Germany? We should apply the same standards in respect of refugees from South Africa.

Mr. Butler: I am aware of the humanity which prompts the hon. Member to put this Question. It is one of considerable complexity which is at the present moment under the active examination of my noble Friend.

Mr. Gaitskell: Will the Home Secretary give an assurance that, pending examination of the legal complexities,

these two men will not be sent back to South Africa?

Mr. Butler: My hon. Friend the Minister of State for Commonwealth Relations has promised to make a statement as soon as possible about these two men, and he will do that. I undertake that the right hon. Gentleman's sentiments will be borne in mind.

Mr. C. Davies: May I put it more generally? This country has a centuries-old high tradition of affording sanctuary to anyone in danger of political persecution. Is it the Government's intention to maintain that tradition intact?

Mr. Butler: The Government's intention is to retain all our best traditions intact, but I must also draw the attention of the House to the complexity of this question, which is governed by the immigration law of particular Protectorates or Colonies. This question is a broad one relating also to Colonies, in which the jurisdiction of the courts plays a very important part. That is why I said that the matter was under very careful consideration at the moment and why my hon. Friend would make a statement upon it.

Mr. Gaitskell: Surely the Leader of the House can confirm what the Minister of State said that, pending the legal review, these two men will not foe sent back to South Africa? That is the least we can expect.

Mr. Butler: These two men are at present in the Protectorate, and I do not anticipate any other action until my hon. Friend makes his statement.

Mr. Albu: If the immigration laws of the Protectorate are the difficulty, will the Leader of the House give an assurance that these men will be brought to this country, where I do not think the same immigration law applies?

Mr. Butler: In the case of British citizens or British protected persons, which these two gentlemen will no doubt be able to claim, there will be no difficulty about entry into the United Kingdom.

HOUSE OF COMMONS CATERING

Mr. Shepherd: asked the hon. Member for Holland with Boston, as Chairman of the Kitchen Committee, what steps his Department takes to prevent the House of Commons refreshment facilities from being used for advancing commercial interests of individual firms or groups of firms.

Sir Herbert Butcher: I would refer my hon. Friend to the Answer I gave to the hon. Member for Newbury (Sir A. Hurd) on Monday, 28th March.
In my reply I referred to a rule of the Kitchen Committee dealing with advertisement or publicity in connection with functions held in the Dining Rooms. I would have thought that this rule, together with the good sense of Members, who alone can reserve accommodation, would have prevented any misuse of the refreshment facilities in the House of Commons. I am, however, examining the matter to see whether any change in the present arrangements is desirable.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir GORDON TOUCHE in the Chair]

Orders of the Day — BUDGET STATEMENT

3.32 p.m.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): The Committee may remember that I announced on 2nd December, in answer to a Question, that, in future, withdrawals of dutiable goods from bond would not be made on Budget day after 4.0 p.m. This releases me from the tyranny of the time table, which forbade me to reach my proposals till after 4.30. So I am now rather more free to arrange what I have to say in the most logical sequence, instead of seeing that I do not reach my more dramatic revelations before the clock strikes its approving chime. I am sure that the relief will be even greater to the Committee than it is to me.
I propose to deal with matters in the following order. First, I shall describe shortly what has happened to the Exchequer in the past year. Then I shall review the progress of the economy, and shall go on from there to say what I expect to happen in the year ahead. I shall then put before the Committee my estimates of how the Exchequer will fare on the basis of existing taxation, and, finally, I shall deal with my proposals for the coming year. It will, perhaps, be helpful to the Committee if I say at the outset that the purpose of my proposals this year will be to consolidate and fortify our present prosperity.

Orders of the Day — EXCHEQUER OUT-TURN, 1959–60

First, then, a brief description of how the Exchequer came out last year. Hon. Members have the figures before them in the first three tables of the Blue Paper, so that I need pick out only the salient points.

REVENUE

Last year's revenue was well above my expectations at £5,630 million, which is £305 million more than the estimate. This was due to a rise in tax receipts resulting in the main from the expanding economic


activity during the year, which was reflected in higher incomes, in increased purchases of dutiable goods and in higher Stock Exchange values. Thus, Inland Revenue duties, at £3,010 million, produced £154 million more than the estimate, Customs and Excise duties, at £2,282 million, produced £132 million more, while motor vehicle duties at £108 million also showed a slight increase. Non-tax revenue came out very much as I had estimated.

EXPENDITURE

Above-the-line expenditure was very close to expectations, being £5,244 million, £21 million above the Budget estimate. Consolidated Fund services showed a rise of £14 million over the estimate, owing to the rise in interest rates towards the end of the year. Supply expenditure, at £4,502 million, showed an increase of £7 million over the Budget estimate; an increase in civil expenditure of £33 million was very nearly offset by a shortfall of £26 million on defence. The result above the line was a surplus very much better than I budgeted for—£386 million instead of £102 million.

BELOW THE LINE

Below-the-line receipts, at £386 million, were £4 million more than the estimate. Total payments at £1,086 million were £119 million less than I had estimated. About half of this difference was accounted for by two items. First, advances to nationalised industries, including the National Coal Board, were £47 million less than the estimate. Secondly, claims for the release of postwar credits, under our new arrangements, were lighter than expected. It was, of course, difficult to be at all sure how many claims we might receive from persons in the categories listed in the regulations approved last year. In the event, we paid out £25 million less than I had estimated.

SUMMARY OF OUTTURN

So, over the year, the Exchequer as a whole has done a good deal better than I expected, partly because of reduced outgoings, but mainly because of increased revenue—in itself a striking testimony to the success of our policy of expansion. So, while I had at the

beginning of the year to face the prospect of borrowing for the Budget no less than £721 million, in the event the amount I had to borrow for this purpose was £314 million. This was a welcome transformation from the outlook as it was a year ago. Any burden of remorse I may feel for the inaccuracy of my marksmanship is, I own, somewhat lightened by consideration of the benefit which has accrued to the public purse.

DEBT OPERATIONS

An important source to which Chancellors look for help in financing the Exchequer is, of course, National Savings. I am glad to say that they had another outstandingly successful year. Net receipts from National Savings Certificates, Defence Bonds and Premium Savings Bonds were £252 million. Deposits in the Post Office Savings Bank and the ordinary departments of the Trustee Savings Banks rose by £87 million. It was particularly encouraging to see a rise in deposits at the Post Office Savings Bank; this is only the second year since the war that this has happened.

In all, £339 million of new money was lent to the Exchequer in these ways during the year, while the total amount remaining invested in National Savings —that is, bringing in accrued interest on National Savings Certificates and deposits in the Special Investment Departments of the Trustee Savings Banks—rose during the year by nearly £400 million. I remember saying last October that it looked as if we were in for an annus mirabilis for National Savings; and, so it has proved. The National Savings Movement must have overheard my "humble hope for more" expressed on that occasion.

I should like once again to thank Lord Mackintosh and all those loyal workers all over the country who devote so much time to this most worthwhile form of voluntary public service. I hope that this splendid result of their efforts will be a reward and an encouragement to them.

Their success has been all the more welcome in view of the difficult conditions we had to face in the gilt-edged market last year. Unlike the previous year, we had no long periods of sustained demand for gilt-edged stocks, and we were only occasionally able to sell on


any scale. Moreover, during the year no less than £950 million of Government stock matured for redemption, and in the course of our operations there was a certain amount of what the Americans call "attrition"; in other words, some holders of Government maturing stock did not take other Government securities in place of their holdings, and had to be repaid in cash. The market also needed a good deal of help from the authorities to absorb the heavy sales of securities by the banks throughout the year. The upshot of all this was that over the year as a whole we paid out more to the gilt-edged market than we were able to take in by new issues and official sales.

As a result of these and all the other transactions of the Exchequer, there has been a substantial rise in the amount of Treasury bills in the market. Some of the additional bills were taken up by the clearing banks, but far more by others; much of this probably resulted from the rise in overseas holdings of sterling.

Orders of the Day — THE UNITED KINGDOM ECONOMY: REVIEW OF 1959–60

I now turn from the Exchequer to describe how the economy has fared over the past year.

The starting point of the economic analysis in my Budget speech last year was the existence of unused resources of capital equipment and manpower. I then foresaw a growth in demand, but not a sufficiently large one to make full use of these resources. The Committee will remember that, starting in the summer of 1958, the Government had deliberately put in hand various measures designed to stimulate the economy. Some involved the removal of restrictions and others the expansion of public expenditure. In the Budget I carried these measures of stimulation further. In this way, I hoped to encourage a further expansion of economic activity and a fall in unemployment.

These hopes have been realised. The number of unemployed fell from a peak of 621,000 in January, 1959, to 413,000 last month. Over the year, the numbers in employment rose by over 300,000, and the index of industrial production rose by 10 per cent., accompanied by a large

increase in productivity. These are good figures.

An important factor in the expansion was rising exports, which increased by 14 per cent. in volume between the three months ending February, 1959, and the same period a year later. This increase was better than I expected. The Government have continued to direct their policies towards the expansion of international trade and hence towards increasing export opportunities. But it is clear that the major cause of the increase in exports was the increased prosperity of all our main customers overseas.

At home, consumer expenditure makes up the largest part of demand. This was already rising somewhat—but not fast-before last year's Budget, mainly as a consequence of the ending of credit restriction, including controls on hire purchase, in the second half of 1958. Then the Budget itself left a good deal more money in taxpayers' pockets, and also reduced the prices of many consumer goods through the cuts in indirect taxes. Economic expansion also fostered the growth of consumer purchasing power, as employment and earnings increased, this being a year—last year, that is to say—in which earnings rose markedly even though wage-rates rose relatively little. Further, and most significantly, it was a year in which a rise in money income brought an equal rise in real income. The gains which people made were real ones. So there was a general growth in prosperity—which enabled consumers both to buy more and, at the same time, to save more than they had done in any previous post-war year.

Personal savings are estimated to have risen from £1,260 million in 1958 to about £1,450 million in 1959. This is a record figure. At the same time, the hire-purchase debt of consumers rose by £250 million in 1959. Bearing in mind that the increase in hire-purchase debt is an offset to saving—a form of negative saving, or "dissaving," as the economists call it—the achievement of so large an increase in net savings was a remarkable one. It was a practical demonstration of confidence in the policies of the Government, and it was a most important factor in the attainment of expansion without inflation.

Current expenditure on goods and services by public authorities rose by about


2½ per cent. The growth of capital expenditure in the public sector was a good deal faster, the increase being about 6½ per cent.

In the private sector, expenditure on fixed investment by manufacturing industry was less last year than it had been in the previous year, but fixed investment by other sections of private industry continued the upward trend which has gone on steadily for some years now. There was also a sharp rise in the number of new houses built on private account. In total, fixed investment, public and private, rose by about 4½ per cent. between 1958 and 1959. Incidentally, it was interesting and encouraging that the level of total fixed investment was at least maintained throughout the slackening of activity in 1957–58.

One of my forecasts last year was that investment in stocks would rise, and after allowing for normal seasonal factors the figures show a strong upward trend over the year,. As I said last year, our information about stocks is not always easy to interpret, but in the ordinary way one would expect stocks to be run down in the early stages of a recovery and to be rebuilt in the later stages. This does seem broadly to have been happening last year. Thus, a further source of rising demand was added to the already increasing factors, namely, exports, consumption and fixed investment.

The expansion of bank landing which began in the last part of 1958 has continued into the present year. In the banking year ended on 16th March last the advances of the London clearing banks rose by £642 million and their net deposits by £246 million.

For the reasons I have been describing the total demand on our resources rose during the course of 1959. The increased call on home production was not quite so big, because there was a fairly substantial rise in imports, most striking in the field of manufactured goods. Nevertheless, the index of industrial production rose by 10 per cent. between the end of 1958 and the end of 1959, and there were increases of activity on a substantial, though smaller, scale in most other sectors of the economy.

This large rise in production was achieved despite the fact that the numbers in employment rose less than 1½ per cent. It was, however, sufficient to

bring the figures of unemployment down sharply. The main source of increased production has been a most welcome rise in output per head. In the long run—we cannot too often remember this—this is the only way in which, as a nation, we can earn an increase in our standard of living. Over the country as a whole both our working population and our capital equipment are now pretty fully employed—though as we all know, there is, unfortunately, far from an even spread of activity over all areas and all industries.

In some parts of the country, there is still a problem of persistent local unemployment. The Committee is familiar with the various measures which the Government are taking in particular through the Local Employment Act to deal with this important problem, but there are other areas, containing at least 60 per cent. of the total labour force, where there is now a shortage of manpower, and there are some industries which cannot meet all the demands made upon them. Notwithstanding the difficulties of particular areas, the picture that emerges is certainly not that of a general weakness of demand.

My hopes of last year that expansion could be achieved without sacrificing stability of prices have so far been fulfilled. We have had good fortune with food prices. More important has been the movement of industrial costs. Changes in wage rates last year were comparatively small. Changes in average earnings were bigger, but increased wage payments were more than matched last year by increased production. Indeed, these increases in earnings were much nearer than in any other recent year to the rate at which increased productivity could enable us to continue expansion in the long term without inflation, and this was the biggest single contributory factor in the price stability of the past year.

Prices have now been stable for nearly two years—a year and ten months, I think—a much longer period than we have enjoyed for very many years. A stable cost of living has been of tremendous benefit to us all, and, most of all, to those who live on small fixed incomes. It has been an important factor too in the success of our exports. Its continuance must be one of the main objectives of our policy.

I come now to the balance of payments, and here I must frankly say that the outcome of the last twelve months has been disappointing. I said in my Budget statement last year that I was not expecting so exceptionally favourable a year as 1958, when everything worked in our favour in this branch of the field. But I had hoped that the surplus on current account would be big enough to cover the normal flow of funds for investment overseas, including the increased aid which we planned to give to the underdeveloped countries. The first half of the year was not unfavourable, but the situation changed over the second half, with a marked deterioration shortly before the end of the year. This was largely due to an increase in imports—a natural consequence, of course, of the expansion in domestic activity—and to a fall in the surplus on invisibles, mostly because of a reduction of the net earnings from oil.

In the event, the current surplus fell from £349 million in 1958 to £145 million in 1959. A decline of almost £200 million on current account might seem marginal in relation to the total volume of transactions involved—of the order of nearly £5,000 million on either side of the account; but it is far from marginal in relation to the size of the sums which we must find for overseas investment and aid, and of our reserves.

On capital account, we maintained a high level of investment overseas. Particularly important were the loans to India and other Commonwealth countries, following on the decisions taken at the Montreal Conference in September, 1958, to increase economic aid to the less developed countries in the Commonwealth. There were also certain special capital transactions. In particular, we subscribed £232 million—an additional subscription—to the International Monetary Fund, and repaid the balance of the loan from the Export-Import Bank of £89 million. This increased subscription to the International Monetary Fund very considerably strengthened our second line of reserves, and the repayment of the Export-Import Bank loan saved us interest charges and extinguished a liability.

Leaving aside the special transactions, the reduced surplus in the year on current account was insufficient to cover the capital outflow. The outcome was that, apart from these special transactions, the monetary position worsened by about £100 million—a most unwelcome result.

Let me sum up what I have been saying. Our policy in 1959 was to stimulate the revival of business activity, investment and employment, while maintaining price stability, and that policy succeeded; but we must never allow ourselves to forget the close connection which exists between the level of home demand and the state of our external balance of payments. Our standard of living depends ultimately on our ability to pay our way in a very competitive world. And if we overstrain our resources of manpower and materials, the result must be both to handicap our exports and to swell our import bill beyond what we can afford. The deterioration in the balance of payments towards the end of the year was a sign—the first sign— of incipient overstrain, and it was to moderate this tendency that the Bank Rate was raised on 21st January from 4 per cent. to 5 per cent.

I feel that I must apologise to the Committee for the rather statistical nature of these reviews. I hope that hon. Gentlemen who find them fatiguing will perhaps feel like Mark Twain—I think it was—felt about classical music, when he said that "it was a great comfort anyway to know that it was very much better than it sounded."

Orders of the Day — PROSPECTS FOR 1960–61

I come now to consider the economic prospects for the coming year. I will start by looking at the world outside the United Kingdom. For more than a year now world production and trade have been expanding strongly, and they seem likely to continue doing so. In the great industrial nations of Europe and North America expansion continues, and, mainly as a result of this, the primary producing countries, who did not do so well in the earlier stages of world recovery, are now enjoying a happier trend.

We ought to be able to sell a steadily increasing volume of exports in these


overseas markets as their prosperity advances, and once again I must say that all our hopes for continued economic progress depend on the success of our exports. This, in turn, will depend partly on the vigour with which our exporting industries seize their opportunities, and partly on the economic forces which determine both the claims of the home market and the level of our costs.

Some of these economic forces can be influenced by Government decisions, while others depend on the actions of employers and trades unions all over the country. That is what I have been trying to emphasise in my speeches when I have said that the responsibility for ensuring that sensible policies are followed is one in which all of us have a part to play—through the exercise of our own individual responsibilities and through that powerful collective influence, public opinion. If the benefits of higher productivity can be shared throughout the nation and not used solely to increase wages or profits it will make a tremendous difference to our economic welfare.

So much for export prospects. On the side of home demand the principal item is personal consumption, and here too continued expansion seems probable. Personal incomes will tend to rise as a consequence both of increases in wages, salaries and profits, and of the higher level of employment. Consumption will consequently also tend to rise, though there is one offsetting factor here, and that is the increase in the amount of income which has to be set aside for the repayment of hire-purchase debt. It is unlikely that the net increase in this debt will be nearly so large this year as last and this will damp down the rise in total consumer demand. I do not expect the rate of increase in consumer demand from now onward to be as rapid as it was during 1959, though for the year as a whole the growth over last year might well be of the order of, say, 4 per cent.

The volume of goods and services purchased by public authorities will also tend to rise somewhat. The size of this rise is not exactly indicated by the increase in the total of the Estimates, for several reasons. The Estimates, first, cover only the expenditure of the central Government: on the other hand, they cover a good deal of expenditure that does not make a direct claim on goods

and services. Finally, the Estimates are in money terms, whereas what I am speaking about now is in real terms. Making allowances for both these factors I expect a rather faster rate of increase in public current expenditure this year than last year, and the rise between the two calendar years looks like being about 4½ per cent.

The next most important item in home demand is investment in fixed capital. In the public sector, I estimate that the amount of investment in the coming financial year will be about 6 per cent. above that for last year. But a good deal of this rise has already taken place in the early months of the year and the rate of growth has been slowing down, so that the pace of the increase from now on should be rather less than that figure.

The outlook for investment in the private sector has changed markedly over recent months. I shall refer, in turn, to the prospects in the three main sectors —manufacturing industry, the distributive trades, and private house building.

Our study of the prospects for private industry and trade is very greatly assisted by the forecasts of capital expenditure which are regularly supplied to the Board of Trade by a large number of firms in industry. This information has proved to be quite a good indicator of the total of business investment. I should like to thank all the managements concerned who co-operate in this and other statistical inquiries, which take up a good deal of manpower, as I realise, but which help to provide the factual basis which we need for our decisions.

The declining tendency in investment in manufacturing industry gave me quite a bit of anxiety last year, particularly when the forecasts collected in the middle of the year seemed to point to a further decline in 1960. It is evident, however, that towards the end of the year manufacturers substantially revised their plans, for the results of the survey made in December pointed to an expected rise of 14 per cent. in investment between 1959 and the present year. The most dramatic increase was in the steel and motor car industries, but there was a definite upward revision over a much wider field. No doubt the raising of the sights was a sign of growing confidence in the expansion of the economy: I have even heard it suggested that certain


political events last October may conceivably have played a part. I express no opinion on that thesis, but these views must be recorded. Whatever the causes, this result was most welcome to me.

In the distributive and service industries, investment has been growing fairly steadily from year to year for some time past, and here, too, there was a considerable upward revision in the forecasts for 1960 between the middle and end of last year. The revised forecast, which is a high one, and I do not know whether it will be realised, shows an increase of 20 per cent. Finally, the growth of private house building, which was so marked a feature of 1959, is also expected to continue throughout 1960.

Clearly, this expectation of increased investment in industry generally, and in house building, will provide a further expansive force in the economy during the coming year. In total, I expect an increase of at least 10 per cent. in private investment demand between 1959 and the present year. In itself I warmly welcome this continued growth in investment, which, reinforced by the still rising investment in the public sector, will provide the indispensable foundation for the further increases in production and in living standards that we all want.

But I must remind the Committee that an increase in exports, which is essential as a sound base for all our other activities, and an increase in investment, which is necessary for continued growth, can only be achieved if we are willing to set appropriate limits to the other calls made on our expanding production. It is my duty to see that these limits are not exceeded.

So far, my review of the various elements of demand falling upon our productive capacity has shown them all as likely to rise somewhat. The last and most uncertain element is investment in stocks and work-in-progress. This is an element which is very hard to measure and even more difficult to forecast, particularly because the trend is apt to change very suddenly. It seems reasonable to expect a continued building up of stocks in line with the expansion of activity generally, but it does not seem likely that the rate of build-up will go on increasing as fast as it did during last year.

What I have said will have shown that there cannot be much doubt that demand in total will continue to increase. The rate of increase will probably be less than it was in 1959, for the two main reasons which I have indicated, namely, that net lending on hire purchase will probably be lower and that investment in stocks is unlikely to exert such an expansionary force as it did in 1959. On the other hand, we no longer have the reserves of labour and capacity on which we could count a year ago. These reserves have been to a considerable extent taken up already by the expansion of production. We still have a certain amount of unused capacity in particular industries, and particular places. The existence of this capacity may make it possible, I think, for production to continue to grow for a time at a faster rate than we could hope to maintain year in year out. But if we look at the economy as a whole there are some dangers that expansionary forces already in the economy could lead to overloading.

If the economy were to be allowed to become overloaded our hopes of maintaining price stability would be destroyed. A still more dangerous result would be the threat to the balance of payments, and that must always be our main concern. The key to a sound position here is the growth of our exports. Everything depends on that. We must increase our overseas earnings sufficiently to meet the claims on them. These claims will be higher in the coming year for several reasons. First, our import bill may well be higher. The growth in home production will call for higher imports of materials and there may, of course, be some rise in import prices. We cannot expect that the very favourable terms of trade which we have enjoyed in the last few years will always be with us. [HON. MEMBERS: "Hear, hear."] I have always acknowledged the assistance that is given.

Secondly, there is likely to be a continuing rise in overseas investment, both public and private. As can be seen from the White Paper which we published a few weeks ago, there has been a rapid rise in the last two years in the amount of assistance given by the United Kingdom Government to the less developed countries. If we are to keep up that rate of investment and meet the cost of our


imports, then we must increase our export earnings. That is the central challenge and we should delude ourselves if we think that we can ignore it.

This point was admirably put, if I may say so, by my right hon. Friend the Prime Minister in his speech to the Commonwealth and Empire Industries Association on 15th March. He said:
But one thing I would say to our people at home. We cannot give aid abroad unless we are prepared to that extent to limit the growth of our consumption at home. You can't lend unless you have a surplus to lend from. It is not much help lending someone part of your overdraft. This is no appeal for austerity. Our national output is growing fast, and we can give aid and still have a rising living standard. But the cost of the aid still has to be met out of our product; and, equally important, it demands rising exports to provide a margin of foreign exchange for investment and assistance overseas.

The importance of this problem, which my right hon. Friend posed so clearly, cannot be overstressed.. It is fundamental to our whole position.

So our present position is one in which production, employment, investment and savings are all running at a high and satisfactory level. The cost of living is stable. The standard of living of the nation has never been so high. This is great progress. We all want it to continue. That is entirely possible, provided that we do not force the pace beyond our resources. What those resources permit at any time is a difficult matter of judgment. My own judgment is that the prospective increase in demand arising from the factors I have mentioned is likely at least fully to absorb, and might even involve a danger of outrunning, the increase in production which can be expected.

An important factor in maintaining a proper balance in the economy is, of course, monetary and credit policy. Here, we must be continually on our watch to see that our policies are adapted to changing circumstances. Last year, we were glad to see an expansion of credit, which made a notable contribution to our policy of stimulating the economy. Now, however, I judge that we have reached the stage where we should be cautious about further expansion of credit. We have no wish to take such drastic action as might reverse the trend of private industrial investment. But, equally, we must be careful not to

allow credit expansion to prejudice stability in the internal economy or balance of payments.

First steps in changing the climate for private lending have already been taken by the increase in Bank Rate in January and in open market transactions. I must tell the Committee that I think it likely that the time may soon arrive when it would be right that we should take other steps to restrain further expansion of private credit; and we stand ready to do so.

Orders of the Day — EXCHEQUER PROSPECTS FOR 1960–61

I turn now to the Exchequer prospects for the coming year. The full figures will, as usual, be given in the White Paper circulated at the end of my speech.

REVENUE

On the basis of existing taxation, I expect to receive next year from Inland Revenue duties £3,280 million, an increase of £270 million over last year's out-turn. I put the revenue from Customs and Excise at £2,380 million, £98 million more than last year. I expect a further increase in receipts from motor duties, which I put at £113 million, or £5 million above last year. Other revenue I estimate at £185 million or £45 million less than last year, when we had special receipts in the shape of an advance payment of debt by Germany. Total revenue, therefore, I put at £5,958 million, or £328 million more than last year's out-turn.

EXPENDITURE

On the expenditure side, Consolidated Fund services are expected to require £769 million, an increase of £41 million over last year's estimate. This is almost entirely due to the higher level of interest rates.

Total Supply expenditure, as already published in the Vote on Account and in the Defence White Paper, is put at £4,836 million, which is £341 million higher than last year's Budget estimate. After adjusting last year's figures to put them on a comparable basis, this represents additional expenditure of £85 million on the defence programme, and £256 million on civil expenditure. These are very large increases, the need for


which must be of concern to any Chancellor of the Exchequer. They certainly do not make my task this year any easier. I would, however, remind the Committee that the figure for defence, high as it is, is still lower in real terms than it was some years ago. On the civil side, the main increases are in grants to local authorities, mainly for education, and in the Health Service. I am satisfied that expenditure on this scale is necessary to enable us to carry out those policies which have so recently received the approval of the nation. The things the nation wants—better education, more up-to-date hospitals, new roads, and so on—are all expensive. And if we demand them, then we must be ready to pay for them.

As an offset to this increase in Supply expenditure there are two decreases. The first is one of £9 million on the agricultural Votes. Secondly, as a result of recalculations which have been made of the expenditure likely to be incurred by the Ministry of Aviation during the coming year, the Financial Statement will show a reduction of £10 million from the figure shown in the published Estimate. A revised Estimate will be issued shortly. These changes reduce the provision for Supply services to £4,817 million, and the increase over last year's Budget estimate to £322 million.

So we have a figure of £5,586 million for total ordinary expenditure to set against the figure I have already given of £5,958 million for ordinary revenue on the basis of existing taxation. The result is an above-the-line surplus of £372 million, which is £270 million more than I budgeted for last year, and £14 million less than the actual out-turn.

BELOW THE LINE

Below the line, I estimate payments £1,135 million, a reduction of £70 million as compared with last year's estimate and £49 million more than the out-turn. As the detailed figures in the Financial Statement will show, there are within the total a number of changes in either direction. For example, advances to the Coal Board are expected to be £62 million less than last year, but advances to the other nationalised industries £58 million more.

I shall need further statutory powers to continue these advances and shall in due course be moving a special procedure Resolution to enable the matter to be dealt with in the Finance Bill. In the light of the Radcliffe Committee's recommendation I propose that the power should be taken for three years, and that it should be subject to whatever limits Parliament may place from time to time on the borrowing powers of the individual industries concerned. Taking into account repayments and other receipts, which will be slightly higher than last year, I expect the net total of below-the-line payments to be £703 million.

So, together with the above-the-line surplus of £372 million which I have already mentioned, I arrive at a net figure of £331 million to be met by borrowing, as compared with £314 million which was the out-turn last year. I should mention that in these calculations I have not taken account of any receipts which may come to the Exchequer from the Iron and Steel Realisation Account. I fully expect however that the Agency will be able to make significant progress during the year with sales of securities and that the Iron and Steel Realisation Account will yield some very substantial relief to the below-the-line burden on the Exchequer. —[HON. MEMBERS: "Hear, hear."] I cannot tell what that sum will be.

Before I leave the subject of expenditure, I must refer to two matters which cause me particular concern, and which I have had much in mind in formulating my proposals. First, we have to remember the prospect that, arising out of the Royal Commission on the pay of doctors and dentists, we shall have to face a further substantial increase in expenditure on the Health Service.

The second concerns the finances of the British Transport Commission. I have to mention here, first, the prospect of higher expenditure and, secondly, an important change which I propose in the method of financing the Commission.

In the calculations which I have so far made for the coming year I have included below the line a sum of £90 million for the expected deficit of the Commission in the year. I have, however, to bear in mind that, although this


figure includes the cost of the recent 5 per cent. interim increase in railway wages, it includes nothing in respect of any further increases which may result from the negotiations now in progress on the Guillebaud Report.

As the Committee is aware, the deficits of the Commission have, since the passing of the Transport (Railway Finances) Act, 1957, been financed by advances from the Exchequer. These have been on the basis that the Commission would eventually make profits out of which it could both pay interest on the advances and repay the principal. For this purpose the Treasury was given borrowing powers by Parliament. It has become apparent that the prospects of the railways and the Commission are not now such as to justify the continued financing of the deficit by repayable advances.

The treatment of such advances as have already been made, and the question of the future capital structure of the Commission, are matters which will be decided by the Government in connection with the measures foreshadowed in this House on 10th March by my right hon. Friend the Prime Minister. The working out of detailed proposals, and the preparation of the necessary legislation, will take time, and the Bill cannot be brought in until next Session. I have, nevertheless, thought it right to anticipate this in my Budget so far as concerns the method of financing the British Transport Commission in the coming year.

For the purposes of my Budget calculations I am accordingly transferring the sum of £90 million from below the line to above the line. The effect of this is that the amount of the deficit will have to be met from revenue, a sharp reminder of the harsh realities of a disturbing situation. My right hon. Friend the Minister of Transport will in due course submit a Supplementary Estimate for the necessary amount.

This important change reduces the above the line surplus by £90 million to £282 million and the below-the-line deficit by the same amount to £613 million leaving the same figure of £331 million to be met by borrowing.

SAVINGS

In considering the borrowing problem for the coming year, my thoughts turn, naturally, to National Savings. I have

been thinking how I could further encourage small savers, and I have a number of practical proposals to make.

Since 1958, individual holdings in the current issue of National Savings Certificates have been limited to 1,000 15s. units, that is, to an investment of £750. I am proposing next Monday to increase this limit to 1,200 units costing £900.

The 5 per cent. Defence Bond has been so successful that it will be necessary to introduce a new issue with different dates for the interest payments. The new issue, which will otherwise carry the same terms as the old, will come out in June. When it is made I have decided that the limit on holdings shall be £5,000 instead of £2,000 as at present, and that this will be additional to holdings in the present or earlier issues.

I am also proposing to make a number of changes in the Premium Savings Bond scheme. Since this was introduced by my right hon. Friend the Prime Minister in 1956, a total of about £290 million has been invested of which no more than £38 million has been withdrawn, leaving a balance still invested of about £250 million. So there is no doubt that this new security has been remarkably successful. It has attracted this considerable volume of savings to the Exchequer in a way which has enabled millions of people, including, I trust, almost every hon. Member of this Committee, to spice their saving with a little mild excitement. However, it is not surprising that three years' experience should have given us some new ideas and I am proposing to improve the scheme in several ways.

First, the six months waiting period before a bond is eligible to be drawn for a prize may have proved rather a severe test of the average saver's patience. I propose to reduce this to three months.

Secondly, the allocation of prizes will be altered. I think that when the Premium Bond was launched my right hon. Friend was wise to regard this as a scheme in which it would not be right to pay enormous prizes. I still believe this, but I think that we could make it more attractive by introducing a few prizes of £5,000, and I propose to do so. At the same time, we shall increase the total number of prizes and in this way appreciably improve the chances which any one bond has of winning a prize. The details of the new prize


allocation will be given in the Financial Statement.

There has been a good deal of interest lately in this question of the chances. I think it likely that many—or even maybe most—hon. Members of the Committee are more familiar with the technicalities of calculating odds than I, in my innocence, am. Under the present method of calculating the prize fund, I am advised that the odds against winning a prize tend to lengthen with the passage of time. The extent of this has been very greatly exaggerated, but to dispose of the matter I propose that in future each bond will contribute one month's interest only to the prize fund for each draw, whether the bond is in the draw for the first time or not. At the same time, the rate of interest on which the prize fund is based will be increased from 4 per cent. to 4½ per cent. The effect of this, together with my proposal for increasing the number of prizes, will be that the odds will be both shortened and stabilised.

There are two other changes I propose. One is to increase from £500 to £800 the number of Premium Bonds which may be held. The other is some easement of the rule which makes a bond ineligible for a prize after the death of the holder. I have come across a number of cases where this rule seemed to me to work out rather hardly for the relatives. I propose to make bonds eligible for a prize in the first monthly draw after the death of the holder.

These changes cannot come into force until the expiry of the necessary six months' notice and will first apply to the prize draw on 1st November. I wish that it could come in earlier. From then on they will apply to all outstanding bonds purchased since the beginning of the scheme and not merely to bonds purchased in the future. Until the November draw the present terms will, of course, continue unchanged. I should like to emphasise that people who have Premium Bonds now do not have to take any action to secure the benefit of the new and attractive terms. All they have to do is hold on to their bonds.

Orders of the Day — BUDGET PROPOSALS

I turn now to my Budget proposals proper. I have explained the need for a moderate amount of restraint on the economy, and have referred to the additional expenditure which we are likely to have to meet during this year. It is clear, therefore, that I cannot make any net reduction in taxation in this Budget. I consider, indeed, that the position calls for some modest net increases. I have thought it right to take the opportunity to make a number of changes which will lead to improvements in the tax law, and, indeed, one or two concessions for which I think there are particularly strong arguments.

HACKNEY CARRIAGES

My first proposal relates to hackney carriages. I am proposing to amend the legal definition of a hackney carriage so that the amount of Excise licence duty payable on this type of vehicle will no longer depend on the period for which it is hired.

PLAYING CARDS

Next, in the field of Customs and Excise, I propose the abolition, root and branch, of a duty which is hallowed by 249 years' existence on the Statute Book. The duty of 3d. on a pack of playing cards is now outdated, playing cards being chargeable with Purchase Tax. I therefore propose to abolish this duty from 4th August at a cost of £40,000 this year and £60,000 in a full year. I trust that this concession will not lead to untoward dissipation.

TOBACCO RETAILERS' LICENCES

Next, I propose to simplify the collection of tobacco retailers' licences. They are at present renewable annually at a cost of 5s. 3d. and will in future be issued for a period of four years, at a cost of £1. This new arrangement will take effect from 1st October.

MECHANICAL LIGHTERS

Inspired by reforming zeal, and moving on from one bold action to another, I propose to make a small alteration in the scope and administration of the duty on mechanical lighters.

HYDROCARBON OIL

I propose, too, to make a change in the administrative control of the hydrocarbon oil duty in so far as it affects heavy oils used in road vehicles.

Details of these minor Customs and Excise changes will be found in the White Paper. I have to mention all these things that require Resolutions.

WINE

I have now certain changes to propose in the wine duties. During the negotiations which led up to the signature of the Convention of the European Free Trade Association, the Portuguese representatives emphasised their great concern about the level of duties on heavy wines, which form an important and traditional part of their exports to this country. I had to say that, as this was a budgetary matter, it could not be dealt with in the negotiations, but I undertook to give careful consideration to the Portuguese submission. As it happened there were other, purely domestic, reasons which made it desirable to adjust these duties.

The Committee will recall that two years ago I improved the structure of the wine duties by bringing the rates for heavy wines into a better relation with those for light wines, but that I was then unable to go as far as I would have wished. The duties on heavy wines are still out of line to some extent and the position is unsatisfactory, both for the trade and for the revenue. I now propose to complete this reform of the wine duty structure by reducing the rates for imported heavy wines by 12s. a gallon. This is not a reduction that I would have chosen to make on this particular occasion were it not for the trade reasons I have mentioned.

In this new structure, the duty on light wines imported in cask will remain unchanged. But the present rates of duty on light wines imported in bottle, including sparkling wines, will be reduced by the same amount, 12s. a gallon, since some of them would otherwise be higher than the new rates on heavy wines. In conformity with the new structure, the excise duty on British wines will be reduced by 8s. a gallon for still heavy wines and 12s. a gallon for all sparkling wines.

These changes, which operate from tomorrow, are estimated to cost £3¾ million this year and £4 million in a full year.

ENTERTAINMENTS DUTY

Next, I come to entertainments duty. This was discussed very fully in our debates on the Finance Bill last year, and I have continued to receive numerous representations about it.

As the Committee is aware, very substantial reductions have been made in this duty over recent years, the latest being the provision in last year's Finance Act relieving cinemas of the first £20 of their weekly duty liability. Although these concessions have been of real benefit to the trade, and, in particular, to the smaller cinemas, most of which have been completely relieved of duty, the steep decline in attendances has continued during the past year and many more cinemas have closed: and it seems that this process is not yet at an end. While, no doubt, this decline is mainly attributable to other factors, I have come to the conclusion that the continuation of the duty in present circumstances is no longer justified.

I have, therefore, decided to recommend its abolition at a cost of £6½ million this year and £7 million in a full year. This change, which I am sure will be welcomed on both sides of the Committee, will take effect from 10th April. My right hon. Friend the President of the Board of Trade is considering whether any changes should be made in the regulations governing the collection of the exhibitors' levy. In the meantime, no exhibitor's liability to levy will be increased as a result of the abolition of the duty.

Orders of the Day — INLAND REVENUE

I have a number of proposals in the Inland Revenue field. I will deal, first, with those designed for the protection of the Revenue.

POST-CESSATION RECEIPTS

The first concerns particular types of what are called post-cessation receipts. Decisions of the courts in the cases of the late Mr. Leslie Howard and the late Mr. Peter Cheyney have established that under present law certain receipts of the nature of royalties coming in after a profession has ceased are not liable to Income Tax. The court decisions apply to cases where a profession has ended


for reasons other than death, and the position is being exploited by some taxpayers to secure freedom from tax on their earnings.

The Royal Commission recommended that there should be legislation to close the gap revealed by the Leslie Howard case and I propose accordingly to provide that receipts of the kind I have described should be made liable to tax notwithstanding that they come in after the profession has actually or nominally ceased. There will be due allowance for any relevant expenses or unrelieved losses.

Mr. Harold Wilson: Does that include lawyers?

Mr. Amory: It is a different kind of case, as I think the right hon. Gentleman will realise when he sees it in the Clauses of the Finance Bill.

COMPENSATION FOR LOSS OF OFFICE

My next proposal concerns payment to retiring directors or employees. I have particularly in mind large payments made in the last few years to directors who have ceased to hold office on the occasion of take-over bids. Such payments may represent both a deductible expense for the company that pays them and a tax-free benefit to the recipient. Moreover, as the Royal Commission pointed out, there are cases in which, to use its own words:
what is ostensibly a payment in compensation for loss of office is sometimes used merely as a cloak for additional remuneration".

I have had the whole question of these terminal payments thoroughly examined. It is by no means an easy subject.

Following the Royal Commission, I propose to bring within the tax charge voluntary payments at the end of employment and all payments described as compensation for loss of office, but to exclude reasonable lump sum payments in the nature of superannuation benefits. I shall also exclude payments arising from physical injury, certain payments made by Government or local authorities, and redundancy payments of limited amount.

HOBBY FARMING

My next proposal concerns losses in farming and certain other activities. As

the Committee knows, attention has been focussed lately on the continuous losses incurred by some so-called hobby farmers. As the law stands the revenue suffers by having to repay the tax on other income equivalent to the loss, and the Royal Commission on the Taxation of Profits and Income advised that action should be taken.

I propose that loss relief in respect of farming losses—or, indeed, any other trading losses—shall be admitted if, and only if, the activities are carried on "on a commercial basis and with a reasonable expectation of profit". I am sure this is fair. It will not adversely affect genuine farming at all. I believe, in fact, that the genuine farming activities carried on by those who also have other occupations in many cases bring benefit to the farming industry.

This new provision will operate as respects loss claims for the year 1960–61 and subsequent years. My proposal will, therefore, give those who may be affected notice of the basis for dealing with loss claims in respect of the Income Tax year that starts on Wednesday. They will be able, if they are so minded, to start at once to put their affairs on to a commercial basis and if they can show the General Commissioners, next April, that they have done so they should not be adversely affected by the new provision.

OTHER CLAIMS FOR LOSS RELIEF

With the foregoing proposal about losses I associate another. There is in the Income Tax code, Section 142 of the Income Tax Act, 1952, another provision which enables a loss in one trade to be set against the profits of another trade carried on by the same person. Section 142 has, I regret to say, been used for tax avoidance purposes. Because of the special rules for assessment in the early years it is possible for a loss incurred at the outset of a new business to be set against the profits of another business two or nearly three times over—a possibility, as the Committee will realise, extremely painful to me. The needs which Section 142 was designed to meet have since been met by other provisions for the relief of losses either by set-off against income of the year of loss or by carry-forward. I therefore propose the repeal of Section 142.

DEDUCTION OF TAX BY THE CROWN

My next proposal is to deal with the difficulties which flow from the judgments of the House of Lords in the case of Whitworth Park Coal Co. v. Commissioners of Inland Revenue. Their Lordships took the view that the Crown was not authorised to deduct tax from certain income payments made to former colliery companies under the Coal Industry Nationalisation Acts. These payments were made and accepted on the basis that they were legally subject to deduction of Income Tax. If they had been made without deduction of tax and taxed by direct assessment the companies would have been in very much the same position as they were after tax was deducted at source. I understand, however, that a number of companies have issued writs against the Ministry of Power claiming repayment of the amounts originally deducted on account of tax. If these claims were to succeed the companies would make an unjustified and wholly unexpected profit at the public expense, because with the passage of time the earlier payments would escape Income Tax. I propose, therefore, to provide in the Finance Bill that the law shall be what, before this case, it was assumed by all to be. Thus, tax deductions made by the Crown from these payments will be validated retrospectively for all purposes, including the purposes of any legal proceedings already instituted.

DIVIDEND STRIPPING

I now come to a particularly serious matter. I have hitherto been reluctant to contemplate a general provision against tax avoidance by transactions in stocks, shares and securities. My predecessors and I have endeavoured to deal with dividend strippers and bond-washers by legislating against specific devices as they came to notice. But fresh devices involving the manipulation of stocks and shares with the object of depriving the Revenue of its proper tax, I am sorry to say, have come to light recently. Moreover, safeguards that were introduced in earlier legislation to protect legitimate business are being twisted for the purpose of avoidance. Experience of the development of these objectionable activities drives me to the conclusion that any provision which is limited in its application is carefully

studied in order to find a new way of cheating the Inland Revenue. I have, therefore, reluctantly reached the conclusion that we must take rather wider powers.

I propose, therefore, the introduction into the Income Tax code, as regards transactions in stocks, shares and securities, of a general provision against avoidance corresponding broadly to what we already have for Profits Tax. In substance, my proposal is that where any transaction in stocks, shares or securities appears to have been arranged with the object of securing an Income Tax or Surtax advantage, the Commissioners of Inland Revenue shall be empowered to give a direction or directions in order to nullify the tax advantages that would otherwise be gained. Such a direction might provide for making an assessment or denying a claim to repayment or for the recomputation of tax liabilities to suit the demerits of any particular scheme.

I shall, of course, provide for the exclusion of bona fide commercial transactions not entered into with the object of securing a tax benefit. Similarly, transactions which can be shown to be no more than genuine investments, transfers or changes in the portfolio of individuals will be excluded. There will be a right of appeal to the Special Commissioners of Income Tax and from them on any point of law to the courts.

The prevention of these devices is in the interests not only of the Revenue, but also of the great body of fair-minded and honourable businessmen. I hope that I shall have the support of the whole Committee in putting into effect the provisions which I propose.

OTHER TAX AVOIDANCE

I must also propose further specific measures against avoidance that could hardly be dealt with by this general provision. First, there is a device under which financial operators purport to sell stocks, cum dividend, through the Stock Exchange, when they have no title to receive a dividend themselves. These transactions can lead to heavy revenue loss, though the persons who purchase cum dividend may be blameless.

Secondly, there is a device under which the persons in control of a company arrange that when that company


has almost completed a project which in the ordinary course would lead to a taxable trading profit, the shares in it are sold so that the accrued profit, in effect, reaches the shareholders in the form of capital appreciation rather than income.

Thirdly, certain types of transaction have come to our notice, in which, by switching investments between financial dealing concerns and investment holding concerns that are under the same control, the proper tax on the profits of dealing is avoided and, in effect, the profits are taken in the form of capital appreciation. I shall bring forward in the Finance Bill specific provisions to cover all these matters.

INCOME TAX PENALTIES

A subject which has been much discussed in connection with a case that reached the House of Lords is that of Income Tax penalties. We have now completed a review of these penalties and I shall introduce the provisions for the changes which I recommend in the Finance Bill.

Orders of the Day — N.A.T.O.

I mention next a minor matter affecting our relations with N.A.T.O. I propose to give statutory effect to an existing practice under which, in accordance with international agreement, tax reliefs are granted to members of N.A.T.O. forces from other countries who are serving in the United Kingdom, in respect of income arising overseas.

RETIREMENT ANNUITIES OF THE SELF-EMPLOYED

I am also proposing to make a trivial amendment to remove a small anomaly in the provisions of the 1956 Finance Act regarding retirement annuities of the self-employed and others.

UNIT TRUSTS

It was represented to me last year that unit trusts should enjoy the same relief in respect of their management expenses as is given to investment trust companies. I did not feel able to adopt that suggestion by itself since unit trusts enjoyed more favourable treatment than investment trusts in the matter of Profits Tax. Those concerned have now told me that they would be content if their position, in both of these respects, were assimi-

lated to that of investment trust companies. This is reasonable and I propose that unit trusts shall be made liable to Profits Tax and shall be given Income Tax relief in respect of their management expenses.

FLAT-RATE ALLOWANCE FOR EMPLOYEES' NATIONAL INSURANCE CONTRIBUTIONS

The introduction of the graduated National Insurance scheme creates difficulties for the calculation of P.A.Y.E. codings, because no one will be able to say in advance what graduated contributions a particular employee will pay. I have come to the conclusion, after a good deal of study, that the only practicable solution is to have a flat-rate allowance for all adult employees. This will mean that some employees will get relief on slightly more than they pay, and others on slightly less.

The amount of the normal allowance which I propose is £15. This is somewhat above a true average. The self-employed and the non-employed will continue to receive the same allowance as they do now, since P.A.Y.E. considerations do not apply to them.

ESTATE DUTY

I pass now to one or two small measures of tax relief, taking, first, the Estate Duty. There can be no question this year of major changes, but I can propose two reforms which, I think, will make the incidence of the duty more equitable. The first concerns the treatment of gifts inter vivos. At present, gifts made by a person within five years preceding his death are charged as though they were part of his estate. This means that one day can make all the difference between full liability and complete exemption.

I propose to adopt the suggestion that there should be some graduation in these payments. Under my proposal, gifts made within two years of death will be charged in full. Where gifts were made in the third year before death, 15 per cent. will be left out of account and not charged to duty. For gifts made in the fourth year before death the reduction will be 30 per cent., and for those made in the fifth year before death it will be 60 per cent. This is estimated to cost about £1 million this year, and £2 million in a full year.

My second proposal is a concession on what is called the assets basis of valuation. It is that where this basis is applicable to an ordinary trading concern the business shall always be valued as a going concern and not, as sometimes happens now, according to its value on a break-up. I think that that is fair.

INCOME TAX PERSONAL ALLOWANCES

I come now to Income Tax allowances. Here again, I have very little scope this year, but I am glad to be able to propose some useful alleviations for people with responsibility for young children who have lost one or both of their parents, and for others who support old or infirm relatives.

First, I propose to adopt a suggestion that has been strongly urged upon me and to increase the dependent relative and housekeeper allowances from £60 to £75. The dependent relative allowance goes principally to those who support relatives of limited means who are incapacitated by old age or infirmity. The main purpose of the housekeeper allowance is to assist widows and widowers, and in some cases single persons, who employ a housekeeper or maintain a relative to look after young children who have last one or both parents. The last improvement in these allowances was in 1953, and I am sure that this increase is right. It will cost £5½ million this year, and £6¾ million in a full year.

But I propose to go further than this. The Royal Commission took the view that the existing allowances did not cover adequately the real reduction of taxable capacity and earning power which takes place when a husband or wife is left by the other's death with the responsibility for dependent children. The Commission's proposal was to abolish the housekeeper allowance for widows and widowers and to give an equivalent allowance to all widows and widowers with children, whether or not they had a resident housekeeper. I think it better to treat the problem rather differently.

While keeping the entitlement to the housekeeper allowance as it now is, and increasing the rate of that allowance, I now propose in addition a new allowance of £40 for a widow or widower who has a child or children eligible for child allowance and who has no resident

housekeeper. The new allowance will be available also to single persons who are responsible for young children and who have no housekeeper, but would qualify for housekeeper allowance if they had one. It will cost £1½ million this year, and £2 million in a full year.

REPAYMENT OF POST-WAR CREDITS

I come now to post-war credits. As I promised last year I have been considering the possibility of extending the categories of people who can claim repayment on hardship grounds. This is not an easy matter. As I said last year, we can deal only with categories of hardship that can be defined readily and precisely and our experience has confirmed the truth of this.

I have carefully examined the problem and have reached the conclusion that I can now go rather further. The new categories are as follows. First, persons who have been receiving sickness benefit or industrial injury benefit for a continuous period of 26 weeks ending after today. Secondly, persons who have been registered as unemployed for a continuous period of 26 weeks ending after today. Thirdly, those who are receiving either a war or industrial injury disablement allowance on the basis of a 100 per cent. assessment. Fourthly, I have decided to extend repayment to all widows who are entitled to post-war credits in their own right.

The precise conditions to be satisfied by claimants under these heads will be set out in Statutory Regulations which will be laid today. Copies will be available in the Vote Office shortly after I sit down. These regulations will require an affirmative Resolution of the House, and I hope that this can be passed before the House rises for the Easter Recess. New claim forms will then have to be printed and distributed to the many thousands of post offices all over the country and this will take a little time. My intention is that revised claim forms should be available in post offices on 16th May, and that the Inland Revenue should begin paying out to the new categories on Monday, 13th June.

These proposals will cost this year about £9 million. This is in addition to the £18 million which will be repayable this year under the existing regulations.

The total effect of the changes in taxation to which I have referred will be to


reduce revenue above the line by £18 million. The special arrangements about post-war credits will increase expenditure below the line by £9 million. The consequent addition to the overall deficit might be regarded as not significant in itself. But it has to be viewed against the general background of the Budget.

It follows from my assessment of the economic outlook that I must raise at least sufficient additional revenue to cover the cost of these concessions, and, indeed, rather more.

TOBACCO

I have decided that I must look to the Tobacco Duty for the additional revenue I need this year. I fully appreciate that smokers already make a very large contribution to the Exchequer and am reluctant to make a fresh demand on them. But consumption of tobacco has been rising steadily and I am satisfied that there is room for a moderate increase in this duty.

I therefore propose to raise the duties on tobacco leaf by 3s. 4d. a lb. and to make appropriate adjustments in the rates chargeable on imported cigars, cigarettes and other manufactured tobacco. This is equivalent, for example, to an additional 2d. on a packet of 20 cigarettes of the sort at present selling for 3s. 11d. I estimate that this increase in duty will yield £39 million in the present financial year and £40 million in a full year. The new rates will come into effect tomorrow.

PROFITS TAX

I have decided also to propose an increase in the Profits Tax by 2½ per cent. from 10 per cent. to 12½ per cent. An increase in this tax taking effect, as is customary, from a current date, will not bring in any appreciable amount of revenue this year. But the knowledge that the higher tax in respect of current profits will have to be provided for will influence the decisions of managements, and will thus have an immediate effect on the economy.

Company profits have been increasing very rapidly during the past year and look like continuing at a high level. I am anxious not to provide any disincentive for industrial investment and for this reason I propose the continuance

of the investment allowances reintroduced last year.

In view of the sharply rising trend of dividends, I am satisfied that this increase should not hold back sound schemes of re-equipment or expansion, but is likely not to be without its influence on consumption and expenditure. The estimated yield of this increase is only £1 million this year, but £40 million next year and £65 million in a full year.

CONCLUSION

The result of all these changes is that the surplus above the line will become £304 million as against the surplus of £102 million which I budgeted for last year and the deficit below the line £622 million, leaving a sum of £318 million to be covered by borrowing, compared with the sum of £721 million budgeted for last year. These figures reflect a deliberately cautious attitude, and there is, in addition, the immediate effect of the Profits Tax increase. Such a policy, in my judgment, is justified both by the present buoyant level of activity, and the prospective expenditure with which I am confronted.

This Budget releases no further spending power—its effect will, indeed, be to withdraw some. Taken together with the increase in the Bank Rate in January and the statement I have made that we stand ready to take any further corrective measures that may be called for in the near future in the monetary field, it will, I believe, have just that moderating influence on the rate of expansion that we need in existing circumstances. It should consolidate and secure the encouraging progress which we have made, and enable us to continue our advance in the year ahead at a pace which will not endanger the stability upon which our whole prosperity depends.

1. Tobacco (customs and excise)

Motion made,
That—

(a) as from the fifth day of April, nineteen hundred and sixty, the duties of customs and excise chargeable on tobacco under section three of the Finance Act, 1947. shall be charged at rates increased by adding three shillings and fourpence per pound to each of the existing rates, that is, those set out in Part I or Part II of the First Schedule to the Finance Act, 1956;
(b) as respects tobacco on which there have been paid duties of customs or excise at the said increased rates drawback shall be


allowed at rates increased by adding the like amount to the rates set out in Part III of the said First Schedule.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.— [Mr. Amory.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

The Committee divided: Ayes 318, Noes 221.

Division No. 70.]
AYES
[5.7 p.m.


Agnew, Sir Peter
Donaldson, Cmdr. C. E. M.
Jackson, John


Allan, Robert (Paddington, s.)
Doughty, Charles
James, David


Allason, James
Drayson, G. B.
Jenkins, Robert (Dulwich)


Alport, C. J. M.
du Cann, Edward
Jennings, J. C.


Amory,Rt.Hn.D.Heathcoat(Tiv'tn)
Duncan, Sir James
Johnson, Dr. Donald (Carlisle)


Arbuthnot, John
Duthle, Sir William
Johnson, Eric (Blackley)


Ashton, Sir Hubert
Eccles, Rt. Hon. Sir David
Johnson Smith, Geoffrey


Atkins, Humphrey
Elliott, R. W.
Jones, Rt. Hn. Aubrey (Hall Green)


Balniel, Lord
Emery, Peter
Joseph, Sir Keith


Barber, Anthony
Emmet, Hon. Mrs. Evelyn
Kaberry, Sir Donald


Barlow, Sir John
Errington, Sir Eric
Kerans, Cdr. J. s.


Barter, John
Farey-Jones, F. W.
Kerr, Sir Hamilton


Batsford, Brian
Farr, John
Kershaw, Anthony


Baxter, Sir Beverley (Southgate)
Finlay Graeme
Kimball, Marcus


Bell, Ronald (S. Bucks.)
Finlay, Graeme
Kirk, Peter


Bennett, F. M. (Torquay)
Fisher, Nigel
Kitson, Timothy


Bennett, Dr. Reginald (Gos &amp; Fhm)
Fletcher-Cooke, Charles
Lagden, Godfrey


Berkeley, Humphry
Forrest, George
Lancaster, Col. C. G.


Bevins, Rt. Hon. Reginald (Toxteth)
Fraser, Hn. Hugh (Stafford &amp; Stone)
Langford-Holt, J.


Bidgood, John C.




Bingham, R. M.
Fraser, Ian (Plymouth, Sutton)
Leavey, J. A.


Birch Rt. Hon. Nigel
Freeth, Denzil
Leburn, Gilmour


Bishop, F. P.
Galbraith, Hon. T. G. D.
Lewis, Kenneth (Rutland)


Black sir Cyril
Gammans, Lady
Lilley, F. J. P.


Bossom Clive.
Gardner, Edward
Lindsay, Martin


Bourne-Arton, A.
George, J. C. (Pollok)
Linstead, Sir Hugh


Box Donald
Gibson-watt, David
Litchfield, Capt. John


Boyd-Carpenter, Rt. Hon. John
Glover, Sir Douglas
Lloyd.Rt Hn.Geoflrey(Suf'nC'dfield)


Boyle, Sir Edward
Glyn, Dr. Alan (Clapham)
Lloyd, Rt. Hon. Selwyn (Wirral)


Braine Bernard
Glyn, Col. Richard H. (Dorset, N.)
Longden, Gilbert


Brewis John
Godber, J. B.
Loveys, Walter H.


Bromley-Davenport, Lt.-Col. W. H.
Goodhart, Philip
Low, Rt. Hon. Sir Toby


Brooman-White, R.
Goodhew, Victor
Lucas, Sir Jocelyn (Portsmouth, S.)


Browne, Percy (Torrington)
Gower, Raymond
Lucas-Tooth, Sir Hugh


Bryan, Paul
Grant, Rt. Hon. William (Woodside)
McAdden, Stephen


Bullard, Denys
Grant-Ferris, Wg Cdr. R. (Nantwich)
MacArthur, Ian


Bullus, Wing Commander Eric
Green, Alan
McLaren, Martin


Burden, F. A.
Gresham Cooke, R.
McLaughlin, Mrs. Patricia


Butcher, Sir Herbert
Grimston, Sir Robert
Maclay, Rt. Hon. John


Butler,Rt.Hn.R.A.(Saffron Walden)
Grosvenor, Lt.-Col. R. G.
Maclean,SirFitzroy(Bute&amp;N.Ayrs.)


Campbell, Sir David (Belfast, S.)
Hall, John (Wycombe)
McLean, Neil (Inverness)


Campbell, Gordon (Moray &amp; Nairn)
Hamilton, Michael (Wellingborough)
MacLeod, John (Ross &amp; Cromarty)


Carr, Compton (Barons Court)
Harris, Frederic (Croydon, N.W.)
McMaster, Stanley R.


Carr, Robert (Mitcham)
Harris, Reader (Heston)
Macmillan,Rt.Hn.Harold(Bromley)


Cary, Sir Robert
Harrison, Col. J. H. (Eye)
Macmillan, Maurice (Halifax)


Channon, H. P. G.
Harvey, Sir Arthur Vere (Macclesf'd)
Macpherson, Niall (Dumfries)


Chataway, Christopher
Harvie Anderson, Miss
Maddan, Martin


Chichester-Clark, R.
Hay, John
Maginnis, John E.


Churchill, Rt. Hon. Sir Winston
Heath, Rt. Hon. Edward
Manningham-Buller, Rt. Hn. Sir R.


Clark, Henry (Antrim, N.)
Henderson, John (Cathcart)
Markham, Major Sir Frank


Clark, William (Nottingham, S.)
Henderson-stewart, Sir James
Marlowe, Anthony


Clarke, Brig. Terence (Portsmth.W.)
Hendry, Forbes
Marples, Rt. Hon. Ernest


Cleaver, Leonard
Hicks Beach, Maj. W.
Marshall, Douglas


Cole, Norman
Hiley, Joseph
Marten, Nell


Collard, Richard
Hill, Dr. Rt. Hon. Charles (Luton)
Matthews, Gordon (Meriden)


Cooke, Robert
Hill, Mrs. Eveline (wythenshawe)
Maudling, Rt. Hon. Reginald


Cooper, A. E.
Hill, J. E. B. (S. Norfolk)
Mawby, Ray


Cooper-Key, Sir Neill
Hocking, Philip N.
Maydon, Lt.-Cmdr. S. L. C.


Cordle, John
Holland, Philip
Mills, Stratton


Corfield, F. V.
Hollingworth, John
Moore, Sir Thomas


Costain, A. P.
Hope, Rt. Hon. Lord John
Morgan, William


Coulson, J. M.
Hopkins, Alan
Morrison, John


Courtney Cdr. Anthony
Hornsby-Smith, Rt. Hon. Patricia
Mott-Radclyffe, Sir Charles


Craddock, Beresford (Speltherne)
Howard, Gerald (Cambridgeshire)
Neave, Airey


Crosthwaite-Eyre, Col. O. E.
Howard, Hon G. R. (St. Ives)
Nicholls, Harmar


Crowder, F. P.
Howard, John (Southampton, Test)
Nicholson, Sir Godfrey


Cunningham, Knox
Hughes Hallett, Vice-Admiral John
Noble, Michael


Curran, Charles




Currie, G. B. H.
Hughes-Young, Michael
Nugent, Sir Richard


Dance, James
Hulbert, Sir Norman
Oakshott, Sir Hendrie


d'AvigdorGoldsmid, Sir Henry
Hurd, Sir Anthony
Orr, Capt. L. P. S.


Deedes W. F
Hutchison, Michael Clark
Orr-Ewing, C. Ian


de Ferranti Basil
Iremonger, T. L.
Osborn, John (Hallam)


Digby, Simon wingfield
Irvine, Bryant Godman (Rye)
Osborne, Cyril (Louth)




Page, A. J. (Harrow, W.)
Royle, Anthony (Richmond, Surrey)
Thompson, Kenneth (Walton)


Page, Graham
Russell, Ronald
Thorneycroft, Rt. Hon. Peter


Pannell, Norman (Kirkdale)
Sandys, Rt. Hon. Duncan
Thornton-Kemsley, Sir Colin


Partridge, E.
Scott-Hopkins, James
Tiley, Arthur (Bradford, W.)


Pearson, Frank (Clitheroe)
Seymour, Leslie
Tilney, John (Wavertree)


Peel, John
Shaw, M.
Turner, Colin


Percival, Ian
Sharples, Richard
Turton, Rt. Hon. R. H.


Peyton, John
Shepherd, William
Tweedsmuir, Lady


Pickthorn, Sir Kenneth
Simon, Sir Jocelyn
van Straubenzee, W. R.


Pike, Miss Mervyn
Skeet, T. H. H.
Vane, W. M. F.


Pitman, I.J
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
Vaughan-Morgan, Sir John


Pitt, Miss Edith
Smithers, Peter
Vickers, Miss Joan


Pott, Percivall
Smyth, Brig. Sir John (Norwood)
Vosper, Rt. Hon. Dennis


Powell, J. Enoch
Soames, Rt. Hon. Christopher
Wakefield, Sir Waveil (St. M'lebone)


Price, David (Eastleigh)
Spearman, Sir Alexander
Walker-Smith, Rt. Hon. Derek


Price, H. A. (Lewisham, W.)
Speir, Rupert
Ward, Rt. Hon. George (Worcester)


Prior, J. M. L.
Stanley, Hon. Richard
Ward, Dame Irene (Tynemouth)


Prior-palmer, Brig. Sir Otho
Stevens, Geoffrey
Watkinson, Rt. Hon. Harold


Profumo, Rt. Hon. John
Steward, Harold (Stockport, S.)
Watts, James


Proudfoot, Wilfred
Stodart, J. A.
Webster, David


Ramsden, James
Stoddart-Scott, Col. Sir Malcolm
Wells, John (Maidstone)


Rawlinson, Peter
Storey, Sir Samuel
Whitelaw, William


Redmayne, Rt. Hon. Martin
Studholme, Sir Henry
Williams, Dudley (Exeter)


Rees, Hugh
Summers, Sir Spencer (Aylesbury)
Wills, Sir Gerald (Bridgwater)


Rees-Davies, W. R.
Sumner, Donald (Orpington)
Wilson, Geoffrey (Truro)


Renton, David
Talbot, John E.
Wise, Alfred


Ridley, Hon. Nicholas
Tapsell, Peter
Wolrige-Gordon, Patrick


Ridsdale, Julian
Taylor, Sir Charles (Eastbourne)
Wood, Rt. Hon. Richard


Rippon, Geoffrey
Taylor, W. J. (Bradford, N.)
Woodhouse, C. M.


Roberts, Sir Peter (Heeley)
Teeling, William
Woodnutt, Mark


Robertson, Sir David
Temple, John M.
Woollam, John


Rodgers, John (Sevenoaks)
Thatcher, Mrs. Margaret
Worsley, Marcus


Roots, William
Thomas, Leslie (Canterbury)



Ropner, Col. Sir Leonard
Thomas, Peter (Conway)
TELLERS FOR THE AYES:




Mr. Legh and Mr. Edward Wakefield.




NOES


Abse, Leo
Ede, Rt. Hon. Chuter
Jones, Dan (Burnley)


Ainsley, William
Edelman, Maurice
Jones, Jack (Rotherham)


Albu, Austen
Edwards, Robert (Bilston)
Jones, J. Idwal (Wrexham)


Allaun, Frank (Salford, E.)
Edwards, Walter (Stepney)
Jones, T. W. (Merioneth)


Bacon, Miss Alice
Evans, Albert
Kelley, Richard


Baxter, William (Stirlingshire, W.)
Fitch, Alan
Kenyon, Clifford


Beaney, Alan
Fletcher, Eric
Key, Rt. Hon. C. W,


Bellenger, Rt. Hon. F. J.
Foot, Dingle
King, Dr. Horace


Bence, Cyril (Dunbartonshire, E.)
Forman, J. C.
Lawson, George


Benn, Hn. A. Wedgwood (Brist'l, S. E.)
Fraser, Thomas (Hamilton)
Ledger, Ron


Benson, Sir George
Gaitskell, Rt. Hon- Hugh
Lee, Frederick (Newton)


Blackburn, F.
George, Lady Megan Lloyd
Lee, Miss Jennie (Cannock)


Blyton, William
Ginsburg, David
Lever, Harold (Cheetham)


Boardman, H.
Gooch, E. G.
Lever, L. M. (Ardwick)


Bowden, Herbert W. (Leics, S. W.)
Gordon Walker, Rt. Hon. P. C.
Lipton, Marcus


Bowles, Frank
Gourlay, Harry
Loughlin, Charles


Boyden, James
Greenwood, Anthony
Mabon, Dr. J. Dickson


Braddock, Mrs. E. M.
Grey, Charles
McCann, John


Brockway, A. Fenner
Griffiths, David (Rother Valley)
MacColl, James


Broughton, Dr. A. D. D.
Griffiths, Rt. Hon. James (Llanelly)
McInnes, James


Brown, Alan (Tottenham)
Gunter, Ray
McKay, John (Wallsend)


Brown, Rt. Hon. George (Belper)
Hale, Leslie (Oldham, W.)
McLeavy, Frank


Brown, Thomas (Ince)
Hall, Rt. Hon. Glenvil (Colne Valley)
MacPherson, Malcolm (Stirling)


Butler, Herbert (Hackney, C.)
Hannan, William
Mahon, Simon


Butler, Mrs. Joyce (Wood Green)
Hart, Mrs. Judith
Mallalieu, J. P. W.(Huddersfield, E.)


Callaghan, James
Hayman, F. H.
Manuel, A. C.


Castle, Mrs. Barbara
Henderson, Rt. Hn. Arthur (RwlyRegis)
Mapp, Charles


Chapman, Donald
Herblson, Miss Margaret
Marquand, Rt. Hon. H. A.


Chetwynd, George
Hill, J. (Midlothian)
Marsh, Richard


Cliffe, Michael
Hilton, A. V.
Mason, Roy


Collick, Percy
Holman, Percy
Mellish, R. J.


Corbet, Mrs. Freda
Houghton, Douglas
Mendelson, J. J.


Craddock, George (Bradford, S.)
Howell, Charles A.
Millan, Bruce


Cronin, John
Hoy, James H.
Mitchison, G. R


Crosland, Anthony
Hughes, Cledwyn (Anglesey)
Moody, A. S.


Cullen, Mrs. Alice
Hughes, Emrys (s. Ayrshire)
Morris, John


Darling, George
Hughes, Hector (Aberdeen, N.)
Moyle, Arthur


Davies, G. Elfed (Rhondda, E.)
Hunter, A. E.
Mulley, Frederick


Davies, Harold (Leek)
Hynd, H. (Accrington)
Neal, Harold


Davies, Ifor (Gower)
Hynd, John (Attercliffe)
Noel-Baker, Rt. Hn, Philip (Derby, S.)


Deer, George
Irvine, A. J. (Edge Hill)
Oliver, G. H.


de Freitas, Geoffrey
Janner, Barnett
Oram, A. E.


Delargy, Hugh
Jay, Rt. Hon. Douglas
Oswald, Thomas


Dempsey, James
Jeger, George
Owen, Will


Diamond, John
Jenkins, Roy (Stechford)
Padley, W. E.


Dodds, Norman
Johnson, Carol (Lewisham, S.)
Pannell, Charles (Leeds, W.)


Donnelly, Desmond
Johnston, Douglas (Paisley)
Pargiter, G. A.


Driberg, Tom
Jones, Rt. Hn. A. Creech (Wakefield)
Parker. John (Dagenham)




Parkin, B. T. (Paddington, N.)
Skeffington, Arthur
Wainwright, Edwin


Pavitt, Laurence
Slater, Mrs. Harriet (Stoke, N.)
Warbey, William


Pearson, Arthur (Pontypridd)
Small, William
Watkins, Tudor


Peart, Frederick
Smith, Ellis (Stoke, S.)
Weitzman, David


Pentland, Norman
Snow, Julian
Wells, Peroy (Faversham)


Plummer, Sir Leslie
Sorensen, R. W.
Wells, William (Waisall, N.)


Popplewell, Ernest
Soskice, Rt. Hon. Sir Frank
Wheeldon, W. E.


Prentice, R. E.
Spriggs, Leslie
White, Mrs. Eirene


Price, J. T. (Westhoughton)
Stewart, Michael (Fulham)
Whitlock, William


Probert, Arthur
Stonehouse, John
Wigg, George


Proctor, W. T.
Stones, William
Wilcock, Group Capt. C. A. B.


Pursey, Cmdr. Harry
Strachey, Rt. Hon. John
Wilkins, W. A.


Randall, Harry
Strauss, Rt. Hn. G. R. (Vauxhall)
Willey, Frederick


Rankin, John
Stross,Dr.Barnett(Stoke-on-Trent,C.)
Williams, D. J. (Neath)


Redhead, E. C.
Summer skill, Dr. Rt. Hon. Edith
Williams, Rev. LI. (Abertillery)


Reid, William
Swain, Thomas
Williams, W. R. (Openshaw)


Reynolds, G. W.
Swingler, Stephen
Willis, E. G. (Edinburgh, E.)


Rhodes, H.
Sylvester, George
Wilson, Rt. Hon. Harold (Huyton)


Roberts, Rt. Hon. Alfred
Symonds, J, B.
Winterbottom, R. E.


Roberts, Albert (Normanton)
Taylor, Bernard (Mansfield)
Woodburn, Rt. Hon. A.


Robinson, Kenneth (St. Pancras, N.)
Thomas, George (Cardiff, W.)
Woof, Robert


Ross, William
Thomas, Iorwerth (Rhondda, W.)
Wyatt, Woodrow


Royle, Charles (Salford, West)
Thompson, Dr. Alan (Dunfermline)
Yates, Victor (Ladywood)


Shinwell, Rt. Hon. E.
Thomson, G. M. (Dundee, E.)



Short, Edward
Thornton, Ernest
TELLERS FOR THE NOES:


Silverman, Julius (Aston)
Tomney, Frank
Mr. John Taylor and Mr. Rogers.


Silverman, Sydney (Nelson)
Ungoed-Thomas, Sir Lynn

The (CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Entertainments duty

Motion made, and Question,
That entertainments duty shall not be chargeable in the case of entertainments given after such dale as may be specified in any Act of the present Session relating to finance, and that duty chargeable in the case of entertainments given after the ninth day of April, nineteen hundred and sixty, shall be discharged or repaid.—[Mr Amory.]

put and agreed to.

3. Wines (customs)

Motion made, and Question,
That, as from the fifth day of April, nineteen hundred and sixty, the duties of customs on wines under section four of the Finance Act, 1958, shall be charged as if in the Third Schedule to that Act for each of the rates per gallon, other than the rates for still light wines not in bottle and the rates of additional duty in the case of wine exceeding 42 degrees proof spirit, there were substituted a rate less by twelve shillings, and for each of the rates per gallon of additional duty there were substituted a rate less by one shilling.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory]

put and agreed to.

4. Sweets (excise)

Motion made, and Question,
That, as from the fifth day of April, nineteen hundred and sixty, the duty of excise chargeable on sweets shall be charged at the rate of ten

shillings and sixpence per gallon in the case of still sweets, and sixteen shillings and sixpence per gallon in the case of sparkling sweets.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.— [Mr. Amory.]

put and agreed to.

5. Tobacco dealers' licences (excise)

Motion made, and Question,
That the duty on licences under section one hundred and eighty-seven of the Customs and Excise Act, 1952, shall be increased to one pound (without any reduction or allowance), the duration of the licences being extended so that they expire at the end of the third calendar year after the year in which they are granted, and licences for the sale of intoxicating liquor in passenger aircraft and vessels shall not authorise the sale of tobacco.—[Mr. Amory.]

put and agreed to.

6. Mechanical lighters (customs and excise)

Motion made, and Question,
That, as from the fourth day of August, nineteen hundred and sixty, a mechanical lighter shall be defined for the purposes of the customs and excise duties as any portable contrivance intended to provide a means of ignition, whether by spark or flame or otherwise, being a mechanical, chemical, electrical; or similar contrivance.—[Mr. Amory.]

put and agreed to.

7. Hydrocarbon oils (rebate)

Motion made, and Question,
That rebate on oils may be withheld unless they contain markers and colouring substances. —[Mr. Amory.]

put and agreed to.

8. Vehicles excise (hackney carriages)

Motion made, and Question,
That mechanically propelled vehicles let on hire by a person carrying on a trade of selling such vehicles or letting them on hire shall, unless let under a hire-purchase agreement, be treated as hackney carriages for the purposes of the Vehicles (Excise) Act, 1949, irrespective of the period of hire.—[Mr. Amory.]

put and agreed to.

9. Purchase tax (reliefs)

Motion made, and Question.
That it is expedient' to provide for relief from purchase tax chargeable in respect of articles to be used as exhibits or specimens in a gallery, museum or similar institution, or chargeable on the importation—

(a) of goods as respects which it appears to the Treasury that relief from purchase tax is necessary or expedient with a view to conforming with an international agreement;
(b) of such articles as are mentioned in paragraph 2 or 3 of the Fourth Schedule to the Import Duties Act, 1958; or
(c) of goods as to which the Treasury are satisfied that it is intended to re-export them or goods incorporating them or manufactured or produced from them,

and to provide for matters supplemental to the said relief.—[Mr. Amory.]

put and agreed to.

10. Income tax (charge and rates for 1960–61)

Motion made, and Question,
That income tax for the year 1960–61 shall be charged at the standard rate of seven shillings and ninepence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess as Parliament may hereafter determine.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913. —[Mr. Amory.]

put and agreed to.

11. Income tax (personal reliefs)

Motion made, and Question,
That—

(a) in sections two hundred and fourteen, fifteen, sixteen and eighteen of the Income Tax Act, 1952 (housekeepers, dependent relatives and others), seventy-five pounds shall be substituted for sixty pounds throughout, and correspondingly two hundred and ten pounds shall be substituted for one hundred and ninety-five pounds in section two hundred and sixteen;
(b) if a widow or widower, or any other person who is not entitled for the year of assessment to the higher (married persons) relief under subsection (1) of section two hundred and ten of that Act. And, in the

case of a woman, is throughout the year in full-time employment or engaged full-time in some trade, profession or vocation or totally incapacitated by physical or mental infirmity, proves in the case of that year—

(i) that he is entitled to relief under section two hundred and twelve of that Act in respect of a child resident with him, but
(ii) that he is not entitled to any relief under the said section two hundred and fourteen, fifteen or eighteen, and either that no other individual is entitled to such relief in respect of the charge and care of that child or that his claim has been relinquished,

he shall be entitled to a deduction from the income tax with which he is chargeable equal to tax at the standard rate on forty pounds, the said deduction being however apportionable where more than one individual is entitled to a deduction in connection with the same child and subsections (4) and (5) of the said section two hundred and eighteen applying to the apportionment,
but this Resolution shall not require any change in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the twenty-second day of June, nineteen hundred and sixty.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]

put and agreed to.

12. Income tax (tax-free payments under pre-war provisions)

Motion made, and Question,
That as respects payments falling to be made in 1960–61 or any subsequent year of assessment the appropriate fraction for the purposes of section four hundred and eighty-six of the Income Tax Act, 1952, shall be the fraction of which the numerator is the difference between twenty shillings in the pound and the standard rate of income tax for the year and the denominator is fourteen shillings and sixpence in the pound.—[Mr. Amory.]

put and agreed to.

13. Income tax (national insurance contributions)

Motion made, and Question,
That further provision be made with respect to relief from income tax in respect of contributions under the National Insurance Acts. —[Mr. Amory.]

put and agreed to.

14. Income tax (losses, and capital allowances for agriculture and forestry)

Motion made, and Question.
That—

(a) the availability of losses for relief against tax on other income, and of capital


allowances, primarily available against agricultural or forestry income, for deduction from other income, and the operation of section twenty of the Finance Act, 1953 (subvention payments) shall be restricted by reference to whether the occupation of land or carrying on of a trade is. on a commercial basis and by reference to expectation of profit;
(b) section one hundred and forty-two of the Income Tax Act, 1952 (setting off losses of one trade against profits of another) shall cease to have effect.—[Mr. Amory.]

put and agreed to.

15. Income tax (modifications of tax law to deal with certain kinds of transaction)

Motion made, and Question,
That, to deal with certain kinds of transaction in securities (including stocks and shares) or in the assets of companies, or by way of payments or loans to a company, and with the liquidation of companies in certain cases, provision be made for charging income tax which would not otherwise be chargeable, and for withholding relief from tax or requiring the repayment of sums paid by way of relief.— [Mr. Amory.]

put and agreed to.

16. Income tax (trades, professions and vocations)

Motion made, and Question,

That provision be made as follows with respect to the charge to income tax in respect of trades, professions and vocations, that is to say—

(a) for including in the profits or gains chargeable to tax any sums released in respect of debts deducted in computing for tax purposes the profits or gains of a trade, profession or vocation;
(b) for imposing any charge to tax in respect of profits or gains (including such sums as are referred to in the foregoing paragraph) arising from a trade, profession or vocation which accrue after the trade, profession or vocation has been or is treated for tax purposes as having been discontinued;
(c) for amending the law with respect to the valuation for tax purposes of work in progress in cases where a trade, profession or vocation is discontinued or is treated for tax purposes as discontinued.—[Mr. Amory.]

put and agreed to.

17. Income tax (compensation for loss of office)

Motion made, and Question,

That provision be made for charging to income tax money or money's worth not otherwise chargeable to tax which is paid or given in consideration of, or otherwise directly or indirectly in consequence of or in connection with, the loss, resignation or termination of an office or employment or an alteration of

the functions or remuneration of an office or employment.—[Mr. Amory.]

put and agreed to.

18. Unit trusts (income tax and profits tax)

Motion made, and Question,
That for the purposes of income tax and the profits tax authorised unit trust schemes shall be assimilated to investment companies and the rights of unit holders to shares in investment companies, and that provision shall be made for determining in the case of authorised unit trust schemes the persons by whom either tax is to be payable as on income of an investment company and for treating certain amounts as dividends on shares belonging to the unit holders.—[Mr. Amory.]

put and agreed to.

19. Penalties and assessments (income tax and profits tax)

Motion made, and Question,
That new provision shall be made for charging tax in connection with failures to give due information or produce evidence as to matters concerning income tax or the profits tax (including tax for past years of assessment or chargeable accounting periods) and in connection with incorrect or incomplete statements as to such matters.—[Mr. Amory.]

put and agreed to.

20. Income tax (public departments)

Motion made, and Question,
That the following provisions shall have, and be deemed always to have had, effect for all purposes, including all the purposes of legal proceedings instituted before the date of this Resolution, that is to say—

(a) all the provisions of the Income Tax Acts relating to the assessment, charge, deduction and payment of income tax shall apply in relation to public offices and departments of the Crown, but not so as to require the payment by any such office or department of any tax which would be ultimately borne by the Crown;
(b) any reference in the said Acts to a payment as being not payable or not wholly payable out of profits or gains brought into charge to tax shall be construed as a reference to it as being payable wholly or in part out of a source other than such profits or gains;
(c) there shall be excluded from paragraph (a) public offices and departments of any country, state, province or colony specified in subsection (2) of section four hundred and sixty-one of the Income Tax Act, 1952, but where premises are let to any such excluded office or department, tax to be charged under Schedule A in respect of the premises shall be charged on and paid by the landlord by reference to the rent, any deduction from rent in respect of tax made before the sixth day of April, nineteen hundred and sixty, being treated as lawfully made and as exonerating the landlord;


(d) no-thing in this Resolution shall affect the operation of section twenty-five of the Finance Act, 1925 (liability of Governments of parts of Her Majesty's dominions to taxation in respect of trading operations).

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]

put and agreed to.

21. Profits tax (increase of rate)

Motion made, and Question,

That as from the beginning of April, nineteen hundred and sixty, the rate of the profits tax shall be increased from ten per cent. to twelve and a half per cent.—[Mr. Amory.]

put and agreed to.

22. Incidental and consequential charges(income tax, the profits tax and estate duty)

Motion made, and Question,

That for the purposes of any Act of the present Session relating to finance it is expedient to authorise—

(a) any incidental charge to income tax which may arise from provisions extending (as respects 1959–60 and subsequent years) the relief for retirement annuity premiums;
(b) any incidental charge to income tax or estate duty which may arise from provisions as to the treatment for tax or duty purposes of persons connected with any international headquarters established under the North Atlantic Treaty or with any visiting force;
(c) any charge to the profits tax resulting from amendments of the law relating to income tax authorised by any Resolution of the Committee of Ways and Means passed in the present Session;
(d) any incidental charge to estate duty which may arise from provisions reducing the value of property for duty purposes where a specified part of a five-year period has elapsed before the death or from amendments relating to the valuation for duty purposes of shares in or debentures of companies to which section fifty-five of the Finance Act, 1940, applies.—[Mr. Amory.]

put and agreed to.

23. Amendment of the law

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.—[Mr. Amory.]

5.23 p.m.

Mr. Hugh Gaitskell: I rise in accordance with the traditions of this Committee to offer our congratulations to the Chancellor of the Exchequer on his Budget statement. The Chancellor always commends himself to us by his modesty, by his clarity and by his good humour, and certainly this statement was no exception in these respects.
It had, perhaps, a mixed reception; in certain respects, a rather curious reception. There were certain items in his statement which appeared to me to receive more applause on this side of the Committee than on that. Nevertheless, it was a good, clear statement, and we are grateful to him for that.
I see from the newspapers that the Chancellor has been visited by a pigeon, which laid an egg upon the window sill of his room at the Treasury, and that many soothsayers have been wondering what this portends. I am afraid that the only explanation can be that the pigeon lost its way. It did not realise that, after all, the Treasury was still there to pluck people as well as anybody, and I am afraid that it is not likely to stay there very long.
There is certainly for many people a great deal of disappointment in this Budget. It has disappointed many hopes, particularly of those who voted for the Conservative Party at the last election. It also surprises them, though it did not surprise us, because in fact this Budget is of a pattern that we recognise from previous experience—the pattern that, when the Conservative Party is in power and a General Election is impending, we always have an easy Budget, with plenty of tax concessions, but, as soon as the election is over, then the Chancellor of the Exchequer gets tough with the taxpayers and tough with the country.
Of course, this is not to say that he was wrong in having a tough Budget on this occasion. On the contrary, if we have an easy Budget before an election and we encourage a boom, and have a tremendous expansion, as indeed we have had, then it is not very surprising, having so arranged things that the election takes place at the top of the boom, to find when the next Budget comes along that it has to be a tough one.
There is another striking point in this Budget, to which I should like to draw attention. Government expenditure has gone up by £340 million; I believe the actual figure is slightly below that—£328 million. So, for that matter, has revenue, to almost exactly the same amount. I could not help remembering, as the Chancellor was explaining these figures, the scares that were put around at the time of the General Election about the Labour Party's programme. The country was told that a programme which, after five years, would involve increased expenditure, according to the Tory estimates, of £1,000 million would be absolutely ruinous. In fact, the figures were wrong, but let that pass. Now, we have in one year an increase in Government expenditure under this Government of £320 million, a far higher rate than anything we said we were going to do.
In a sense, the point that we have been making has been proved. It is clear that if we have an expansion, if we have a rapid rise in income and a rapid rise in production, as we claimed would take place, we get a rise in revenue at the same time, and if it had not been for that, the Chancellor of the Exchequer would have had to impose heavier taxation. I hope that next time, at any rate, when the General Election comes along we shall hear rather less of these scares about extravagance and expenditure giving rise to higher taxation.
Turning to the Budget itself, I must say that at one point I thought the Chancellor, if a bit slowly, was proceeding along a rake's progress. He first of all made it easier for us to gamble in buying Premium Bonds, or improving the odds for us, then proceeded to take 3d. off a pack of cards and then to reduce the duty on heavy wines—a picture of gambling and cards in the clubs of St. James's which was rather striking, coming from him.
However, so far as the rest of the Budget is concerned, I would say, first of all, that we warmly welcome the measures which he proposed to adopt for the protection of the Revenue. Indeed, many of these have been proposed during Finance Bill debates in previous years from this side of the Committee. I particularly single out for commendation the measures which he has taken to deal with what became known during the General Election as

the "golden handshake" or the "golden good-bye", and, equally, tax losses in farming, which were undoubtedly becoming something of a scandal, and the general provisions against avoidance in share transactions.
All these are welcome and, although naturally we shall scrutinise the Finance Bill when it comes along, the Chancellor can be assured that on this side of the Committee it will be our endeavour to help him in tightening up the protection of the Revenue rather than in making it looser in any sense whatever.
I cannot say quite the same about his proposals for loosening, as it seems to me, the law relating to Estate Duty. I should have said myself that there was so much tax evasion in the inter vivos arrangements already, and that to reduce the period during which gifts can be made effectively, without the same high rate of taxation, from five to two years was opening even wider a loophole of which people have already been taking advantage to a very considerable extent.
On the other hand, I certainly endorse the minor, though nevertheless welcome, concessions which are being made to widows and widowers with children, the increase in the housekeeping allowance, and the new special allowance which is proposed, and equally, of course, we welcome—all of us, I think, without exception—the greater elasticity which is now provided for the repayment of postwar credits to those in special need. I think that all of us as Members of Parliament must have come up against cases of individuals who were suffering real hardship and who came and asked us whether we could not do something about getting repayment of their postwar credits. In this respect there will be a considerable improvement.
But, while we are thankful for these modest improvements, there is one matter which has been conspicuously omitted by the Chancellor. In its election manifesto, the Conservative Party said that it would ensure that pensioners continued to share in the good things which a steadily expanding economy will bring. The Prime Minister, quoting this with approval, added:
These are not idle words.
The Leader of the House said that the pensioners will take their share of the


rising prosperity of the country, and the Chancellor of the Exchequer himself said:
We intend to ensure that as our prosperity increases pensioners and others will continue to have a share.
It is perfectly clear to the whole Committee that the Chancellor believes we have been enjoying a period of unparalleled prosperity, that there has been a very substantial increase in income generally and that this is also, in his opinion, likely to continue. For instance, he spoke, about the general growth in prosperity. He spoke about expecting a continuation of the increase in consumption. If this is indeed the case, I ask the Government how they reconcile these facts and their forecast with their failure to give the old-age pensioners a single penny. It simply does not add up.
Once again, this is the same story as before. Before an election everything is presented in the rosiest colours and we are all going to benefit, especially those who are suffering hardship. We have an election Budget, as we did in 1955 when very substantial tax concessions were given. At that time, 1955, the right hon. Gentleman the Leader of the House reduced Income Tax and Profits Tax. What did he do that autumn? He came back and increased the Profits Tax again and also increased the tax on pots and pans and other household goods.
The Chancellor of the Exchequer has just rung the changes a little. In the Budget which we had last year before the election he made his Income Tax concessions all right. This time he has slightly increased the Profits Tax again. That time he reduced the beer tax, and this time he puts up the tobacco tax. It is the same story. We have everything presented in the rosiest possible manner before an election, and, of course, a very large number of people are taken in by this. They will now know rather better, I hope, what to expect when they elect a Conservative Government.

5.34 p.m.

Mr. A. E. Cooper: This is the second year in succession that I had the privilege of following the right hon. Gentleman the Leader of the Opposition. He surely must wonder why it is, if our record in budgeting is so bad and so permeated with chicanery, that the

electors still continue to return a Conservative Government. The plain fact is that the policies pursued by the Conservative Government over many years have brought immeasurable prosperity to the people of this country. The ordinary man who votes once every three, four or five years knows these facts and he is not readily taken in by the specious propaganda put out by the Leader of the Opposition and his friends; he is much more concerned with the real facts of life and not with what he might hear on a somewhat brash television broadcast.
I make no apology for saying that I think that, by and large, the Budget will not be received with very great approval up and down the country. It seems to me that we have gone back to the Crippsian economics which brought this country to near-disaster through a period of six years of Labour Government. In 1957 when the Bank Rate was put up and measures were taken to restore the economy, I thought that at last we had broken free from this type of economics and had got away from the idea that increased taxation is the method by which we try to cure an inflationary situation.
The Leader of the Opposition was a member of several Governments after the end of the war in nearly all of which whenever an inflationary situation was developing increased taxation was used to cure it. Although that may have succeeded in the short term, in the end it failed, because, as I have said in the House of Commons over and over again, increased taxation is of itself inflationary because it brings immediate demands by the trade unions for increased wages and a great demand on the part of old-age pensioners for increased pension rates.
I find one part of my right hon. Friend's Budget lamentable. I may be one of few hon. Members who think so, and I may be one of few people in the country who think so, but if the situation is on such a knife edge as my right hon. friend would have lead us to believe, I fail to see any justification for the abolition of the Entertainments Duty. Surely there were other more important things to be done with the few million £s which this tax brings in? The concession will not mean the opening of any new cinemas. It will not mean a reduction of a single penny in the price of any seat of any cinema in the country.
The principal problem in the cinema industry today is one which some of us have been putting forward for some time. It concerns the quality of the films which have been produced. Now that some good films are being produced, nearly all over the country cinemas are filling up. However, if bad films are produced the cinemas will continue to empty. It really falls on the cinema industry itself to put its own house in order and to produce the right quality product, for then it will sell it to a very discerning public. However, to give concessions to this industry for the second year in succession if our economy is so finely adjusted appears to be very bad economics indeed.
My right hon. Friend, it seems to me. has succumbed to the argument of the Economist, whose views are very widely quoted, and whose views are, I believe, very widely held in the Treasury. It is that one can, by drawing off surplus or alleged surplus purchasing power, correct an inflationary situation. As to what has been done in the Budget, the increase in Profits Tax is probably sound and the amount of the increase, 2½ per cent., will probably not have any serious effect overall. The effect will probably be to decrease prices and thereby company margins, but, although on the face of it that to the ordinary consumer may be a good thing, to the Exchequer a reduction in margin obviously means a reduction in revenue. These losses of revenue must obviously lead to increased taxation. So, in other words, what we gain on the swings we lose on the roundabouts. I think that 2½ per cent. is probably a fair figure in the circumstances.
The Tobacco Duty is quite another thing. I should have thought that, of itself, that increase was highly inflationary in the present circumstances and would provide a good peg for old-age pensioners to hang a claim for an increase in pensions.

Mr. Richard Marsh: May we assume from what he has said that the hon. Gentleman, in the light of this Budget, would be prepared to support a claim of that type? Is he saying that it would be justifiable?

Mr. Cooper: I have not said there was any justification for an increase in old-age pensions. What I have said is that the new impost on tobacco certainly

gives the protagonists of an increase a further peg on which to hang their case.
I wish to put this to the right hon. Gentleman the Leader of the Opposition.

Mr. Marcus Lipton: Put it to the Chancellor.

Mr. Cooper: All of us in this Committee are trying hard in one way or another to build up a sound economy for our nation, I think that the right hon. Gentleman would admit that the circumstances which we have experienced in this country since the end of the war have been unique in our history. We ought to try to learn from the lessons of the past and I should have thought that the method of handling our financial affairs from 1945 to 1951—or indeed, I will go further and say until 1955—provided a sufficient case history to show that the measures used in that period were wrong.
Equally, I should have thought the measures proposed and introduced in the House from 1957 to the present time had been proved right, because we have secured an expansion in the economy without any increase in prices whatsoever. We have achieved a general standard of prosperity which we have not been able to achieve previously by any means. I consider that taxation is effective in curing an inflationary situation only if the unemployment position is bad. By "bad", I mean a figure of about 1 million. If we have an era of full or, in some parts of the country, over-full employment, I should have thought that then taxation was the wrong method to adopt, because, inevitably, we should get demands for increases in wages which in turn would put up the costs of products; provided that the cost of wages were not accompanied by appropriate increases in output.
During the past year we have been fortunate in that productivity has moved ahead of wage costs and as a result we have been able to keep prices down. The importance of this brings us back to the whole kernel of my right hon. Friend's Budget. Paraphrased, it is something like this. We can have everything that we want in the way of social services and reduced taxation provided one thing— that we are able to increase our exports substantially.
What do we mean by "substantially"? Is it £100 million a year or £200 million


a year? I think it must be better than that. I think it must be at least a 10 per cent. increase in every year in the next few years and I consider that possible. But it will not be possible if our wage costs are pushed up so high that we then have a situation in which our prices are too high. We must never forget that we are about to enter a period of very severe competition in Europe, with the creation of the two trading blocs, and with the general reduction of tariffs. Unless we are to have a high level of productivity and relatively low labour costs—by that I do not mean a depressed standard of living, but relatively low labour costs in relation to our output—we shall find it impossible to compete with these virile and active countries on the Continent which will be seeking a further large share of the markets of our country.

Mr. Charles Loughlin: Assuming that we get a 10 per cent. increase in productivity, what percentage increase in labour costs, what percentage increase in wages, would the hon. Gentleman consider reasonable?

Mr. Cooper: It is a little difficult for me to generalise on such a question regarding all industries. I assume that the hon. Gentleman is not trying to tie me with a trick question. But I would suppose that, broadly speaking, if we increased production by about 10 per cent. a year wage costs should not rise much more than about 3 per cent. or something like that. We have to consider labour costs in the production and the ordinary profit margins, and so on. That is a general figure and I could be a little wrong either way.
The immediate point to remember is that the new labour costs must be of so small a proportion, or relatively speaking so small a proportion of the new production, that we do not put up our costs. I do not think anyone would deny the truth of that.
I wonder whether hon. Members have read Lloyds Bank Review, published last week, in which Mr. S. A. Cockfield, lately the senior statistician in the Inland Revenue, from his experience in the Inland Revenue and subsequently as financial director of Boots Pure Drug Company, supports the argument I am

putting forward about taxation being the wrong method to use in attempting to cure an inflationary situation.
Professor Carter, writing recently in another booklet called The Three Banks Review, said quite positively that the penalty for expansion without a firm base of exports is a balance of payments crisis. That is a truism of which we are all aware, but we talk about these things so often that familiarity leads to contempt. The ordinary man in the street loses sight of the real importance of export trade to this country. It must increase each year. This year we must make a special effort to increase the figure.
I wish to put to my right hon. Friend the Leader of the House one or two propositions to which he and his right hon. Friends might give some attention. I feel that this question of the development of our export trade is so important now that the Prime Minister should call a conference of the leaders of British industry, and of those associations connected with British industry and that they should be given the real hard facts of our economic situation and told what is possible, and their support sought for active measures to increase our exports.
Secondly, I should like to see the Board of Trade give far wider notice of all the facilities which it has to offer to British industry in our overseas territories. It is not always known throughout the country just what these facilities are, and I think that a great deal could be done to help our exporters if the Board of Trade played a more energetic and active rôle in this matter.
Thirdly, there are measures by which the Export Credits Guarantee Department could assist our exporters still more. We are still faced in many countries with restrictions on payments to our exporters, and I think we could help ourselves a great deal in this way.
I should also like the Prime Minister to call the leaders of the T.U.C., and not only the leaders of the T.U.C. but the leaders of the individual unions who may not themselves be members of the Congress. The trade unions today, by virtue of their dominant position in British industry, have themselves a vital part to play in our future prosperity. I hope hon. Members opposite will believe me when I say that I am not


trying to be controversial in this matter, but to be constructive.
It is perhaps regrettable that the T.U.C. does not possess adequate powers to control the individual unions which make up the T.U.C. It is also regrettable that over the years there appears to have been a disinclination on the part of individual unions to vest in the T.U.C. powers which they know are adequate if it is to fulfil its functions. Many millions of pounds are lost annually in exports, production and wages, and the greatest losers are always those on strike. I am not for a moment suggesting that these strikes are always caused by some madman on the workshop floor. Over industry as a whole there are probably just as many mistakes in management as among the workers.

Mr. Dan Jones: Is the hon. Member not prepared to agree that these strikes, which are unfortunate, are always settled by the trade union movement, the movement he is criticising?

Mr. Cooper: I am talking now about the "wildcat" strikes in which twenty or thirty men are called out by someone in a factory and then, before we know where we are, thousands of men in other factories are out of a job. I said that that sort of conduct is lamentable and that the trade unions ought to have sufficient power to control that sort of activity. I went on to say that I am not condemning these extreme workmen only and that there are just as many faults in management as among workers. This continual loss of millions of pounds in exports, wages and productivity is something which we as a nation just cannot afford. Something must be done to prevent it.
It may have been one of the prime causes of hon. Members opposite failing in the last General Election, but, whether we like it or not, a lot of people feel that the Government have to take some action to curb the power of the trade unions. I am not one of them. I believe that it will be in the best interests of the country if, within the unions themselves, they have sufficient power and the co-operation of their members to avoid this sort of thing. I must, however, warn hon. Members opposite that, unless something is done by the trade unions themselves in the next year or two to put their house in order, the

country will not expect the Government to sit by forever doing nothing in this situation if it interferes with the general rising standard of living of our people.

Mr. William Hannan: The advice of the hon. Member is gratuitous; the trade unions are quite able to look after themselves. Has he seen what was said by the Chief Industrial Commissioner of the Ministry of Labour, Mr. St. John Wilson? He indicated that this talk about the tremendous amount of time lost in industry is more apparent than real. He made a comparison between the loss from industrial disputes and the extraordinary amount of loss from illness and accident.

Mr. Cooper: Of course, the amount of time lost through sickness and injury is very great indeed—much greater than that caused by industrial disputes. No one has ever denied that, but I would remind the hon. Member that there is such a thing as keeping to delivery dates. When selling goods abroad it is very disconcerting when one has letters of credit which expire on a certain date and space is booked in ships to carry goods and then a letter of credit has to be renewed because of an industrial dispute, and a ship lost. It is not good enough to say that these industrial disputes are more apparent than real. They are very real indeed and of sufficient magnitude to justify some special effort being made within the trade union movement to see if they can be avoided. Surely it is in the best interests of the nation if we can conduct our industrial affairs in a more satisfactory manner than they appear to be conducted in certain industries at present.
The Labour Party also has its part to play in helping us to develop our export trade. The bitterness of defeat must not blind it to the fact that our whole industrial prosperity depends on industrial peace. On the benches opposite there are a large number of hon. Members who represent trade unions of one kind or another. They have a very solid influence in the House of Commons and I believe that their prestige in the country and in the places they represent is also very high. I urge them to play a special part in trying to help forward industrial peace, which we all know is so important to our welfare.
There are many dismal people in this country who think that our economy though sound is incapable of further advance. Economics is not an exact science. If one studies the writings and speeches of famous economists ever since the end of the war, if one reads, as I have been reading in the last two or three weeks, the evidence given before the Radcliffe Committee by learned economists who are national figures, and sees how those learned gentlemen argue against each other and take contrary views, one sees how inexact economics is.
All we can do in this matter is to try to learn from the past. I hoped that in 1957 we had learned these lessons and had realised that incentive was the main hope of this country, that high taxation was both a disincentive and inflationary. I am very sorry indeed that in the Budget presented today the net result is an increase in taxation for this year.

5.59 p.m.

Mr. G. A. Pargiter: I support what my right hon. Friend the Leader of the Opposition said in congratulating the Chancellor on the clarity of his Budget. The clarity of what he meant may be indicated by the absence of the Chancellor's hon. Friends from the benches opposite. One can only assume that they have gone to commiserate with their friends who will be caught as the result of the new proposals the Chancellor has made in connection with avoidance of taxation. Possibly they have gone to tell some of their gentleman farmer friends that they had better get rid of that Rolls Royce or Bentley which they have been running on farm losses.
That is very interesting to me, because as far back as the time when Sir Stafford Cripps was Chancellor my attention was drawn to this type of thing which was then going on. The view of the Treasury was that it was quite impossible to separate these activities in such a way as to stop money being spent on one section of the person's activities to rank for a taxation claim against another section of his activities. It is interesting that after all these years the problem has reached such proportions that the Chancellor is obliged to take action. This is the usual story that the Tories never take action in matters of this kind until they become obvious.
I remind hon. Members of the number of times that warnings have been given from this side of the House about dividend stripping and bond washing, for example, and the number of times we have said that the tentative remedies proposed by Chancellors in various Tory Administrations would be quite insufficient to deal with the evil. These have come home to roost. They did not come home to roost last year, but they have done so this year. This emphasises the difference in timing between the two sides of the House. As my right hon. Friend rightly said, it is the recognised Tory pattern to have an easy Budget, giving away £300 million or £400 million, just before an election, and then to tighten up and increase taxation after the election. Often they increase taxation in such a way that the burden falls on those who have not benefited from the previous Budget. In the same way, the extra 2d. on a packet of cigarettes will fall mainly on the general public, whereas those who had the benefit of tax reliefs last year are, in the main, those who are better off.
I should like to refer to the admission which the Chancellor made of the favourable terms of trade of which we have had advantage during the last few years. That favourable balance of trade could have been used to strengthen the nation's economy, but it has not been so used, as is shown in the increased dividends and increased profits but no reduction in prices. We have had stable prices, or something approaching that at a high level, but none of the reduction in prices which the Chancellor has been pleading that manufacturers should introduce. The Chancellor has now warned the House that this favourable trend may not continue, hence the tendency towards stiffer Budgets, a tendency which ought to have been foreseen and provided for a long time ago.
Be that as it may, if we do not have a favourable balance of trade, the next Budget will have to be stiffer than this. I accept what was said by the hon. Member for Ilford, South (Mr. Cooper), that we must look for a considerable increase in our export market if we are to carry the volume of expenditure, including armaments expenditure, to which this country appears to be committed.
I do not think anyone on this side of the Committee, and possibly few hon. Members opposite, will disagree with the


Chancellor's intention to take steps to deal with the "golden handshake". This has become a scandal. Much as hon. Members opposite may dislike retrospective legislation, I hope that the Chancellor's proposals will be made retrospective to catch some of the glaring examples of payments which have been made at the expense of shareholders and companies in general over the last two or three years. This is certainly a matter which warrants retrospective legislation in order that we may not only catch those who seek in the future to find some other way of obtaining tax-free earnings but also remedy the evil which has been allowed to go on in the past.
I noticed the Chancellor's remarks about the Iron and Steel Holding and Realisation Agency and the indication that it must get busy and speed up the sale of steel shares because the Chancellor wants a little more cash to show below the line. He needs it badly to balance his Budget. I suppose that this will mean that more will be done more quickly to dispose of these assets. It is not a case of killing the goose that laid the golden eggs but a case of selling the goose in order that the eggs can be laid in someone else's basket. That will be an immediate gain to the Treasury, which is what the Chancellor is presumably seeking, but it will not be a gain from the long-term view.
We shall watch with considerable interest the proposals for financing the British Transport Commission. This is a long overdue reform and ought to have been undertaken by Chancellors several years ago in order that the industry could have been relieved to some extent of burdens which it has become quite obvious it is incapable of carrying. We on this side of the Committee will not be satisfied unless proposals are introduced which will give the Transport Commission an opportunity of providing an efficient transport service and reasonable wages and conditions for the people who work in it.
It is obvious that on such a Budget as this there could be no question of increasing old-age pensions. The money is not available. It was given away last year to the wrong people. In view of the fact that we are likely to strike a much more difficult period in our trade relations, it is unlikely that we shall con-

tinue to have such a favourable balance on imports as we have been enjoying. The Chancellor said that the increased demand for raw materials inevitably means that the producer countries are getting a better deal than they have had in the last few years.
This means that the terms of trade are likely to move against us. This can be coupled with the possibility of very grave difficulties in the European markets, to which the Chancellor did not refer and which I thought called for some reference from him. All this means that it looks very much as though the old-age pensioners will have to whistle for the rest of this year; Heaven knows when they are likely to receive any improvement in their conditions.
Obviously, the time to improve the conditions for pensioners was when the terms of trade were moving very much in our favour—last year, the year before that, or the year before that. For two or three years there has been an opportunity to benefit those people who most needed help. Instead of that, the money has been given away elsewhere. For instance, there was the removal of hire-purchase restrictions, which was not wrong in itself but which was done specifically to step up the trade of this country to show that we had never had it so good. It was all part of the "never-had-it-so-good" pattern.
The Chancellor says that he does not expect that hire purchase will continue at the present rate, because people have already entered into commitments and have committed themselves a long way ahead. There will be a decline, therefore, in the volume of consumption of durable consumer goods. This might reflect itself in a more vigorous drive by the same manufacturers for more exports. It is obvious that some of them have been having it very soft in this country for a long time because of the policy which the Government have been pursuing, and they will now have to look elsewhere if they are to maintain their trade.
In his efforts to preserve the Revenue against such practices as dividend stripping, we should like to see the Chancellor go even further than he has proposed. In the last year we have seen an increase in share values for many types of shares of about 50 per cent., but there has not


been a 50 per cent. increase in the real value of those undertakings or a 50 per cent. increase in their capacity to produce. Conditions of trade were such that they have been able to unload shares at a much higher price than they are worth. I do not know how much further that will go. It is obvious that the Chancellor is intent on damping it down and presumbaly he will want to damp it down again in the next year or two in order to present a favourable Budget when we reach the next election. Whether the present Chancellor of the Exchequer will be permitted to do that is very doubtful, on today's showing, for it is obvious that he is not very popular with hon. Members behind him in what he has done today. The Chancellor has to tighten up in order to obtain the Revenue which he needs to meet the country's current expenditure. At the same time, those people most urgently needing relief are the least likely to receive it.
There has been no change in Income Tax in the lower ranges. In this Budget one did not particularly expect that there would be, but there was obviously room somewhere to increase slightly the width of the lower bands of Income Tax. There should be some incentive to the ordnary worker as well as an incentive to the manufacturer in the form of allowances for plant and machinery, and so on. Why should not the ordinary person have some incentive, even if only a slight one? Why should not the old-age pensioner have some incentive to live a little better than he is able to at present? We should have spent rather less in the last year on durable consumer goods and given the old-age pensioner a little more to spend on clothes and food. That would have produced a better social product. There would have been much better results from that action than merely to have done a lot of window dressing for the election.
One can only hope that the electors will learn from this Budget that this is the pattern of Tory finance. There is an easy Budget before a General Election. Afterwards they have to put the screw on a bit, but they never put it on in the same place after the election. I am tempted to think that the Labour Party might have been much wiser in the General Election years to have

followed a similar pattern. Instead of that, my right hon. and hon. Friends did precisely the opposite. We were the realists who put the facts before the people when it came to questions of taxation and the conditions of the country. We did not spread about any fancy rosy stories. Because we did not do that, we suffered at successive elections.

Mr. Cooper: The reason the Labour Party failed in those elections was because its policy was seen to have failed. The Labour Government devalued the £. The cost of living continually rose. The policies which the Labour Government followed for years dismally failed and that is why the Labour Party lost, and will continue to lose, elections.

Mr. Pargiter: I am glad to have had that interruption. I wish that the electorate would remember how much the cost of living rose after the Tories came into power. The country had to struggle against rising prices at home, rising import prices, and so on, when the Labour Party was power. If the public realised the facts, they would demand another election very quickly indeed, because those are the facts. It was not the failure of the Labour Party's policy which caused the difficulty. It was the failure of the electorate to understand the situation, against the mass of propaganda which was poured out against it by right hon. and hon. Gentlemen opposite, their friends, and the Press which supports them.
I am glad that the Chancellor comes back to some realities in his Budget and stops up some of the loopholes which the friends of hon. Members opposite are becoming adept at finding. I have no doubt that they will find some other loopholes now. One of the things which the city gentlemen are so expert at is finding loopholes in the tax law. It is a profession now, and a very lucrative one, too. One can only hope that the loopholes which have been stopped up in this Budget will not lead to other holes elsewhere. My right hon. and hon. friends and I hope that the Revenue will gain as a result of these loopholes being blocked.
Finally, no Budget which fails to recognise the needs of the poorest section of the community is a good Budget. No matter what the Budget may have done about stopping up loopholes


and other desirable matters, as the poorer section of the community get no relief at all from this Budget it is a bad Budget.

6.15 p.m.

Brigadier Sir Otho Prior-Palmer: I have only one comment to make on what the hon. Member for Southall (Mr. Pargiter) has just said. He repeated the charge made by the Leader of the Opposition that, immediately after the General Election, the Chancellor of the Exchequer introduces a desperately hard Budget in order that the country can save money so that, by the time the next General Election comes along, he will have some money to give away. In this Budget the Chancellor has put 2d. on a packet of cigarettes. That is a "desperately hard" Budget, is it not? Absolutely nothing else has happened. This is a normal, standstill Budget.
As I have said in the House of Commons many times, the path on which the Chancellor of the Exchequer treads today is a very narrow knife-edge between inflation and deflation. The difficulty is to know how soon to take steps to prevent it becoming a deflationary flood. We let it go too late once in our history since we have been a Government. This time we are taking early steps. The raising of the Bank Rate was one step, and the standstill Budget is another.
Hon. Members opposite will do less than justice to themselves if they do not realise that we on this side of the Committee are wholeheartedly behind the Chancellor of the Exchequer in his attempts to stop up tax avoidance. In fact, I had devoted a whole page of my notes to that subject. [Interruption.] I ask hon. Gentlemen opposite to remember that a Member of Parliament who has been in the House of Commons for sixteen years has some memory of what he has said in the past, what some of his hon. Friends have said in the past, and what we have said in our various Committees. When I make a statement like that, I do not do it for propaganda purposes. Nor do I do it to cause controversy.
I repeat that I had a whole page of my notes devoted to that issue, but I must now throw it away. That has been a scandal, and the whole country knows that it has been a scandal. I am only afraid, as the hon. Member for Southall

said, that people will find other ways of doing similar things.
I welcome the abolition of the Entertainments Duty for cinemas. As I told the proprietors of my own cinemas, when they pleaded for this, I do not believe that it will make much difference to them. I believe that the two reasons for their difficulties are bad films and the fantastic overhead costs and salaries which are paid. They prevent large numbers of first-class films being produced and circulated round the smaller cinemas. It is the rotten film which is keeping people out of cinemas much more than the Entertainments Duty ever did.
I believe that, this being a standstill Budget, greater readjustment could have been attempted. I hope that some of my hon. Friends and I, during the course of the debate on the Finance Bill, will be able to suggest methods by which this can be done. This is a time when a burden which is becoming intolerable for one section of the community could possibly have been shifted to another, to those who are in a better position to bear it.
I make no apology for amplifying some of the remarks I made in my speech on the Loyal Address in the autumn. I believe that the review of the economics of the nation should be the time to examine the impact on individuals. I plead once more for that class which I describe now as "the new poor" of this country. They are not the tax evaders. They are not the "beatniks" or the "wide guys". They are the people who have saved all their working lives. They have worked hard and saved and invested for their old age. In the past, they have done nothing but good for the country. Yet they are in a parlous plight today because of the increase in the cost of living. This is because in their day it was fashionable to invest in gilt-edged securities. It was unexciting, but safe. At least, they felt that their capital was safe.
Before the war, the real poor were the unemployed. That is not so today, thank God. No one is more grateful for that than I am. In fact, one might almost use the term "the new rich". Having said that, I do not want hon. Members opposite to rise and start shouting at me. Today, there are men working in the steel industry in Sheffield taking home £18 to £20 a week. Sometimes, £50 a


week are going into one house. That is fine. What could be better? The production of steel has risen from 20 million tons to 25 million tons, when everyone said that the limit was 20 million tons. In addition to that, the price of steel has been reduced. This is all splendid, and we are not grumbling about that. It is a first-class state of affairs.
I should like to see in this country the problem which one sees in America, namely, the parking problem experienced by 35,000 workers who own motor cars. One of these days we shall see it.
Pari passu with that, however, there are people who are really suffering, and I do not know how emphatically I can plead with my hon. Friend to convey what I have to say to his right hon. Friends at the Treasury. I know of many people who, in their old age, and unable to work, are trying to live on £150 a year. The stock answer is that the cost of living has remained stable and that that is the way to help these people. Good heavens, we would have to halve the cost of living before they would get any real help from that direction.
As I have said, they invested in gilt-edged. We saw what happened to the 2½ per cent. "Daltons"—pandering to the clamour from the other side of the House for cheap interest rates. Where are those standing now? Worse still, there is the 5 per cent. War Loan Stock. In 1932, it was devalued at 3½ per cent., with the hint that it would be repaid in 1952. I have with me the speech of the then Chancellor of the Exchequer who said that. Admittedly, he did not say that it would be so repaid, and those who say that he did are wrong. He did not, but in the prospectus there appeared, in the smallest possible lettering "1952 or after." As we all know, that Chancellor of the Exchequer wrote to every single bondholder, asking them, in their patriotism, to take up that new issue.
I am sure that most of the people of whom I speak were under the impression that that stock would be repaid in 1952. These were not the great investment companies, but the small savers. I therefore plead once again that a date be put on this stock, no matter how far ahead. That will bring its value up to something remotely in accordance with

what these people paid for it. They are longing to sell it, and to reinvest it in something that will bring in a little more to keep them slightly more comfortable in their old age. That one act that could do more to help these people than any other.
If that cannot be done, what about the relation of this type of stock to death duties? In 1917, the Treasury was given power to prescribe certain securities as being acceptable for payment of death duties. In 1918, this was one of the stocks so prescribed, but when the great conversion took place that was all changed, and not one word was said about that by the then Chancellor of the Exchequer in the House at that time. Therefore, my second appeal is that that kind of stock which these people own should be permitted to be used in part payment of Estate Duty. I believe, that that, at least, could be done.
The whole of this problem revolves around the question of rates. We have had the extraordinary situation in which Income Tax—indeed, taxation as a whole—has been going down and down. Incidentally, turning to what some hon. Members have said about giving away lots of money before an election, let us remember that in every post-war Conservative Budget, except the first one, taxes have been reduced.
Taxes have been going down, but rates have been going up, and this trend cannot be allowed to continue at its present speed. Those of us who know a little of local government know that over 50 per cent. of the rates goes on education. That is not to say that I deplore that fact, or that I am suggesting for a moment that we are spending too much on education. We should spend a great deal more. There are local authorities that would like to spend more, but who know perfectly well that the ratepayers just cannot possibly afford a further burden, and particularly the people to whom I refer.
If anyone has any doubt about' what is going to happen I have only to quote what my right hon. Friend the Minister of Education said on 21st March last:
The annual cost of education for England and Wales, which is shared between the Exchequer and local authorities, was £280 million in 1950–51, and … is £700 million a year."— [OFFICIAL REPORT, 21st March. 1960; Vol. 620, c. 54.]


He said that that did not include the university figures, and made no allowance whatever for the Crowther recommendations. He added that by the 1970's we would see the cost of education rise to £1,400 million or £1,500 million.
How can these people, living on the sort of incomes I have mentioned, be expected to pay that bill, in spite of the Government's block grant? I believe that the time has come, or will come fairly soon, when this completely out-of-date rating system must be replaced. It made sense in the days when the person living in a house slightly larger than a council house nearly always had more money than the person in the council house. Today, precisely the reverse is the case. Most of the people in the slightly larger houses would give their eye teeth to get into small ones but, because their house is a little bigger, they still must pay higher rates.
In modern conditions that does not make sense. I therefore plead that a body, a committee, or whatever it may be—I dislike commissions—should be empowered to look into the practicability of introducing some form of local Income Tax to replace the out-of-date rating system. I hope that someone will do something about that—mainly, as I have said, to help some of the pathetic people of whom I speak.
I would have liked Schedule A to have been abolished in the Budget. We on this side have talked and written a lot about a property-owning democracy, but I cannot see that we have done a great deal to help people buy their houses. Getting rid of Schedule A would at least be an incentive. I do not believe for a second that all the administration, all the clerking that goes into this, is worth the candle, because in a very large number of cases maintenance and dilapidations are offset against this impost. Schedule A should be abolished at once.
I would have liked the level of tax-free income to have been raised just a little to help these people, and the lower income limit for National Assistance also raised a little for the same purpose. We all know that it is very hard indeed to get some of these people to draw their National Assistance. I really do wish

that we could change the name, and call it a supplementary pension, or something similar. These people will not realise that it is their right because they have subscribed to it.
I would also have liked the age for post-war credit repayment to have been lowered a little, although I welcome what has already been done. I have had rather bitter experiences with the Minister of Health recently about old people in my constituency, and I will not 1st that one lie.
Some Ministers are not culpable, but I believe that there are others who sit rather like the gods on Mount Olympus, sipping nectar in the sun, and above the weather, and insulated from those in the valley by a layer of Civil Service cloud through which they cannot see. May I ask them to descend from their exalted position occasionally, and try to find out for themselves how some of the people live?

6.30 p.m.

Dr. Horace King: It is always a pleasure to follow the hon. and gallant Member for Worthing (Sir O. Prior-Palmer). We always listen with sympathy to his pleas on behalf of the old folk and people living on fixed incomes. I have listened to him through the years and I have come to the conclusion that his heart and feelings will eventually lead him to this side of the Committee. I wish that I had time to follow up all the points that he made. I can assure him that tobacco smokers will not regard the 2d. increase as something very trivial. They will feel that they have already been paying a colossal amount in taxation and that an equal amount is paid by rich and poor people who smoke the same amount of tobacco. That is why we took the matter to a Division; we voted against an increase in a tax which, in essence, is a regressive tax.
As for the holders of gilt-edged securities, and the grief of the hon. and gallant Member's poor constituents living on fixed incomes, I can only advise him to get to the root cause of their predicament, which is the fact that, under this Government, we have moved steadily from a low interest economy to a 5 per cent. and 6 per cent. interest economy. So long as we steadily pursue a policy of dear money, with a burden of interest


which I regard as usurious, not only the people whose cause he has been pleading but also every local authority and all those who are seeking to buy houses in this "property-owning democracy" will have to pay heavily.

Sir O. Prior-Palmer: The "Daltons" were introduced as part of the cheap money policy, and they are now standing even lower than the War Loans.

Dr. King: The Chancellor has the personal affection of all hon. Members, but it was paradoxical today that the affection showed him during his speech came from hon. Members on this side of the Committee. The various reforms he announced when introducing the Budget were received with cheers from hon. Members on this side of the Committee and with grim and stony silence from his own supporters.
The Chancellor has a right to expect from his supporters not only the personal affection which we all feel for him, but also their political admiration. In the many inquests which have been held upon the General Election, and the question why the Labour Party lost and the Tories won, one important factor has tended to be overlooked. It was not Clause 4 which lost us the General Election; it was the Chancellor's last Budget. This afternoon's statement confirmed the pattern of Tory policy. It is now quite clear. Whether or not the economy can stand it, in the year of a General Election there must be a "give away" Budget, or a "You never had it so good" Budget, and in the year following—as history has shown us and as this afternoon has confirmed—there must be a "stand to" Budget or a "take away" Budget. These ups and downs caused by the Budgets of this Chancellor and his illustrious predecessors are bad for the country.
As the Chancellor has pointed out, we are trying to convince our people that our main battle in this post-war world is to build up British production and productivity in order to be able to compete in the world's markets against increasing difficulties in relation to exports which are our lifeblood. The kind of Budget that we now have had twice before a General Election, followed by the kind of campaign of complacency which the Tory Party ran in those

General Elections, and leading inevitably to the kind of Budget we have had today, confuses the minds of many British electors. Be that as it may, now, as once before, the Chancellor who, last spring, was cooing to those who were expected to vote for the Tories in the autumn, is now wearing his iron mask again. If it had been possible to introduce the Budget, with its cheaper port and dearer Woodbines, before the election it would have transformed the result.
I noticed with some interest that the Chancellor referred to last year as an annus mirabilis. Thinking of Dryden's poem of that name, I thought that it was an unfortunate reference, because the wonderful year which Dryden celebrated in his poem was the year in which Charles II fiddled while London burned. If last year was a wonderful year for some people, the hon. Members on this side of the Committee would be failing in their duty if they did not bring to the notice of the Committee the fact that there are others for whom it was not a wonderful year by any means.
Before dealing with them, I wish to refer to two details which were not mentioned in the Budget. First, the Royal Commission on the Taxation of Profits and Income made a number of recommendations, some of which the Chancellor has accepted and some which we are still waiting for. One of those recommendations was that it should be possible for professional men to make a claim for expenses reasonably incurred in carrying out their profession and offset it against their income, for Income Tax purposes. The teaching profession has pressed successive Chancellors to bring in this reform, and I had hoped that it would appear in the list of detailed taxation improvements which the Chancellor gave this afternoon. As it did not, I ask him to give the matter sympathetic consideration when it is raised in subsequent debates.
Secondly, there is Purchase Tax, which I have always regarded as a bad tax— inevitable in war 'time and in times of utter scarcity but a tax which, in ordinary times, puts up the cost of living, and is inflationary. Like all indirect taxes, it is a regressive tax, because both poor and rich pay the same amount on any goods they buy. It is not the anomalies about which the hon. Member for Kidderminster


(Mr. Nabarro) has spoken so frequently that are the trouble; any Purchase Tax system is bound to contain all kinds of illogicalities and anomalies.
In view of the debates that we have had this year, I had hoped that the Budget would have seen the end of the Philistine taxes that still exist on culture. But apparently we are to remain the only nation in the world which taxes the tools of the musician's trade. I refuse to believe that Britain is so poor that she must collect a few shillings from a child who purchases his first violin, or from a composer who writes music, or members of symphony orchestras which do so much wonderful work these days in bringing an appreciation of music to a wider range of people than ever before.
Apparently we are also to continue taxing the new and remarkable long-playing gramophone records, and the gramophone itself, which have brought the world's rich musical heritage into millions of homes. I hope that in the Finance Bill debates we shall be able to make some dents in this "iron" Chancellor in relation to this tax on culture. Last year, in the Chancellor's pre-election Budget, he gave away handsomely money which he might have saved and used in this Budget for much more reasonable purposes.
I now come to the people of whom I wish mainly to speak—the people for whom this was not a wonderful year. I would mention, first, the railway super-annuitants—the veterans of the old railway services who paid into superannuation funds before the war for pensions which would have been modest enough even if the cost of living had not risen. They have now become so small in actual value that these men can justly claim that they are suffering real hardship.
British Railways gave them two minor increases, partly because of their own pressure through the Railway Super-annuitants' Association, partly because of pressure exerted from hon. Members on both sides of the Committee. One of these, in 1953, gave single men whose pension was under 32s. 6d. a week, and married men whose pension was under £2 a week, a shilling or two. Then, in 1956, there was an all-round increase of 10s. a week to these railway super-annuitants if they were getting under £5 a week.
I can understand the need of the British Transport Commission itself to maintain its superannuation fund in solvency. This is the problem of all insurance funds in times when the value of money is decreasing; if one insured for £100 twenty years ago and one's policy becomes due one finds that the original £100 value of that policy has much declined. No private company insurance fund can adjust itself to the changes in the value of money, but some private companies take some action. For instance, I know an hon. Member on the other side of the Committee who is engaged in a large business and who has adjusted the superannuation contributions of the veterans of his own firm to match the rise in the cost of living.
If the Transport Commission itself cannot do this, I think that the time has come for the Chancellor himself to take under his wing this group of veteran public servants. The only reason up to now that the Chancellor has not included them in the various Pensions (Increase) Acts is the form in which the railways were nationalised. If they had been nationalised in the way in which the Post Office is nationalised these workers would have benefited as Post Office workers benefit under the various Pensions (Increase) Acts.
I would again pay tribute to the work of a former Attorney-General, the right hon. and learned Gentleman the Member for Chertsey (Sir L. Heald), and the 1922 Committee who supported him in persuading previous Chancellors to step up the pensions of all public servants— except this little group of railway super-annuitants. I plead with the Chancellor to take powers in the forthcoming Finance Bill to include this group as a national responsibility and to step up their superannuation. I am sure that both sides of the Committee would support him in doing that. I make that plea on behalf of the veterans, most of whom gave forty or fifty years' devoted service to the railways of Britain.
I want to widen the picture now and to plead for those who have not even the meagre pensions of the railway superannuitants, and I means the old-age pensioners. We are told in the Economic Survey that personal consumption went up by 2 per cent. It certainly did not go up by 2 per cent.


among the old-age pensioners. We are told wages went up by 4 per cent. That is certainly not true of the old-age pensioners. We are told profits went up by even 10 per cent.
Against this, during the year under review, what the old-age pensioners have done, by and large, is what old-age pensioners have done ever since the war—managed barely to hang on to the meagre standard of living we established for them in 1946. There is growing wealth, but enduring poverty, for the old-age pension year by year falls in relation to the average income and spending power of other people. That steadily rises.
Ours is an affluent society, but in the midst of that affluence millions are living in proud poverty. I say "proud" because most of the old-age pensioners whom I know accept what the State provides for them with a spirit of contentment and cheerfulness which ought to be a lesson to most other groups of British citizens. If it were not for the handful of old-age pensioners who are acting as heads of the various old-age pensioners' associations in the country and those who speak in Parliament on their behalf, the just claims of these good folk would hardly be heard. If we go to a Darby and Joan club we meet the most philosophic, cheerful section of the British nation, when they have very little, compared with all the rest of us, to be cheerful about. So I would urge the Chancellor and the Government—I find it difficult to find in this Budget any sign that that will happen—to raise these meagre incomes and to add a little variety to the weekly budget which for many is very much more important than the Budget we are discussing today.
I make no apology for returning again to the subject of the widows, and I would pay tribute to the Chancellor of the Exchequer for the tax relief he has given today to some of the widows and because he has given it to them in virtue of their widowhood. But many widows have incomes too low to benefit from a tax concession.
During the weekend. I received from a widow in my constituency a letter which says:
My husband suffered the horrors of trench warfare as a soldier in Kitchener's Army. In

1940 we lost our home and all our belongings by fire during an air raid on Southampton. I am sure my husband's sufferings during that grim period shortened his life, although he continued to give loyal and valuable service to his country as a Spitfire aircraft technician. Yet a prosperous country insults me, his widow, with a pension of 10s. a week at the age of 62, whilst there are widows ten years younger receiving a pension of 50s. a week.
Another Southampton widow has devoted the evening of her life to voluntary work on behalf of widows throughout the country, and she writes to me:
I have received hundreds of letters from elderly widows who are in a state of despondency and despair.
Some of them, I have no doubt, are in the constituency of the hon. and gallant Gentleman the Member for Worthing. I am certain that he would echo what I am saying. That widow writes:
If an increase were given to elderly Ten Shilling Widows, and a pension were given to elderly pensionless widows"—
because, as I have often pointed out before, there are 10s. widows and no-shilling widows—
it would be a small price for a prosperous country to pay for the fulfilment of its moral obligations to decent, honourable women who are penalised by the failure of their husbands to die at times prescribed by Acts of Parliament.
I would urge the Government and especially the Chancellor to look again at this question of the widows, and especially the elderly widows, the widows whose husbands died too soon to qualify for full National Insurance benefits.
Poor people come to me at my "surgery" each weekend—as, I am certain, they go to every other hon. Member; the old-age pensioners, the widows, the unemployed. My first question to them always is, "Are you sure you are getting all that you are entitled to?" I am certain that my experience is the same as that of all hon. Members, that almost invariably they are getting all that they are entitled to, because National Insurance officials and National Assistance officials are doing a splendid job of work and very rarely make any mistake. If a mistake is made it is because the applicant himself or herself has not given the full particulars, or even because some have not applied for help.
The problem is not one of solving some administrative difficulty. The problem is the simple fact that the basic standard of living below which we say


all these people shall not sink is basically too low. We fixed it as high as we could in 1946, just after the war. Today, when the standard of living in our country is steadily rising, I feel it ought to be on our conscience that as we, most of us, the great proportion of the people, are enjoying our lives in an affluent society, there are millions of people side by side with us who cannot share in that affluence. I am disappointed that there is so very little for them in this Budget.

6.50 p.m.

Mr. Ronald Russell: I am very glad to follow the hon. Member for Southampton, Itchen (Dr. King), because I want to take issue with him on one or two points and to support him very strongly on another. He complained, as did the Leader of the Opposition, that nothing had been done to increase the rate of pension. I think I am right in saying that in no Budget since I have been a Member of the House of Commons has an increase been made in rates of pensions. The increases have been made by announcement by the Minister of Pensions in between Budgets. This does not mean that we shall have necessarily to wait another year before any increase in pensions will be announced. Let us hope that there will be an increase before the next Budget.

Mr. John Rankin: Is that a promise?

Mr. Russell: No, I wish it were, but I think the hon. Member will agree that the three major increases made since the Government have been in power have been made in announcements by the Minister in between Budgets. Let us hope that this will be the case again.

Mr. Rankin: Will the hon. Member also agree with me that there has been no increase at all since January, 1958, and that that increase was made only to a small section among the old folk?

Mr. Russell: I cannot remember exactly when the last increase was made, but since January, 1958, there has been only a slight increase in the cost of living. As the Chancellor said this afternoon, the cost of living has been steady for one year and ten months, that is, since April, 1958, and therefore, except in individual cases of hardship, there has

not been the reason that there was in the past for raising the pension.
The point on which I wanted to support the hon. Member for Itchen relates to railway superannuitants. Here is a comparatively small body of people who are being unjustly treated. Again, I do not think that this is a matter for the Chancellor of the Exchequer. It is a matter for the British Transport Commission, but if the Commission is unable to do something the time has come when the Government should take a hand. Here is a small body of people suffering under more or less pre-war rates of pension which are grossly out of keeping with conditions today. I hope that my right hon. Friend the Chancellor, in conjunction with my right hon. Friend the Minister of Transport, will reconsider this matter before very long. But again, I think that this is a matter which does not have to be dealt with in the Finance Bill.
I must join issue with the hon. Member for Itchen on another point. He said that the Budget was received with cheers from his side of the Committee but in stony silence from this side. All I can say is that hon. and right hon. Members opposite must have been cheering so loudly that they could not hear what was happening on this side. I, for one, cheered, and so did many of my hon. Friends. I regarded it as a good standstill Budget, and I did not expect any other.
I am not so happy about the Tobacco Duty. It does not affect me personally. but perhaps it is not so good for other people. The hon. Member for Itchen said that it was bad to have cheaper port and dearer Woodbines, and that if this Budget had been presented before the last election the result of the election would have been different. But this is not the first time that duty on heavy wines has been reduced. It was reduced two years ago. Before the war port wine was regarded as a cheap drink and was bought by the glass, in particular by old ladies. It is only because it has gone up in price as a result of increases in duty that it is not so popular nowadays.
Unexpected though it was, I welcome the reduction in the duty on heavy wines not so much from the angle of home consumption as from the point of view that this will help certain Commonwealth wine producers who have been pressing


for a reduction for a long time. My right hon. Friend said that he had made this reduction in response to requests from Portugal. I am sorry that it was not done before in response to request from the Commonwealth.
There is a thriving wine-producing industry, for example, in Australia which depends upon its market in this country. The present reduction will result in the margin of preference being increased from about 30 per cent. since the last reduction two years ago to about 40 per cent. now. That should be a help to Commonwealth wines, and particularly to Australian and South African sherry. I hope that hon. Members opposite who advocate the boycotting of South African goods this month will not allow that to prevent their wanting to see more drinking of South African sherry as a normal feature of our economy.
The increase in duty on tobacco worries me because the reverse is happening with Commonwealth tobacco, and particularly Jamaican cigars. This is an industry which has grown up especially since the war, partly as a result of our not having dollar cigars from Cuba for a long time. But output in the Jamaican industry has been reduced as a result of concessions made to the Cuban industry in recent year. The increase in the Tobacco Duty by 3s. 4d. a lb. means a slight reduction in the preference which before the war used to be 25 per cent. and is now under 4 per cent. I should like to see something done in the opposite direction for that reason alone, apart from the effect on smoking in this country.
Like my hon. and gallant Friend the Member for Worthing (Sir O. Prior-Palmer), I regret that nothing has been done about Schedule A tax, because like other hon. Members I want to encourage home ownership. I hope that in time this will be put right. I welcome also, as did my hon. and gallant Friend, the various measures to deal with tax evasion. It may astonish hon. Members opposite that hon. Members on this side of the Committee can take that point of view, but if Parliament agrees to a tax being imposed in a certain way I am all for its being enforced. These are methods which will make it possible to enforce the tax and more difficult to avoid it. Like hon. Members opposite

I cheered the announcement for that reason, and for others.
I welcome the proposal to graduate Estate Duty on gifts inter vivos. It is long overdue. An injustice is being put right. I am sorry that my right hon. Friend has not dealt with another injustice in connection with Estate Duty apart from the question of the rates. This is the provision whereby two estates are aggregated together for the calculation of Estate Duty where a man dies who may have had a certain amount of capital himself but also has been the life tenant of another estate. The estates are now added together and the full rate of duty on both has to be paid on the capital which the man himself owned. That can result in great injustices where possibly half of the capital which the man himself owned— and which he may have wanted to pass on to a dependent who may not benefit from the rest of the estate—can go in duty. I hope that if he cannot do so this year my right hon. Friend will see to this in a future Budget.
My hon. Friend the Member for Ilford, South (Mr. Cooper) mentioned labour relations. I only want to touch on that subject. I hope that all hon. Members before long will have seen the film called "The Angry Silence" which is showing in London now and in certain cinemas outside the capital. It is the story of an employee who was sent to Coventry for not supporting an unofficial strike. There is in the film an example not only of agitators at work but also of a bad employer who made no personal contact whatever with his employees and left matters entirely to his works manager, though he happened to be a good works manager.
This brings me to a point which I have made before and which I have no hesitation in making again—that responsibility for good labour relations initially rests undoubtedly on the management and not on the trade unions. Of course, I am not speaking from personal experience, but I observe what goes on in the country, particularly in my own constituency and in my own borough, where there have been very few strikes in recent years. Speaking from memory, I think there has been only one, the British Oxygen strike, which took place at about the time of the General Election.
All over the country there are many industries in which no strikes have taken place for many years. Plastics, chemicals and steel are three such industries I can think of immediately. So whilst there are troubles in, for example, the motor industry, we should remember the wide sphere of British industry which is free from strikes. Where there is trouble I think it is largely due to management not taking an interest in its workers, which is admittedly more difficult to do in a large industry such as the motor trade. Therefore, I hope the trade unions will help management to weed out the agitator who is either causing trouble for his own ends or for the ends of some foreign Power.
I end by repeating that the responsibility for good labour relations rests primarily on management, and I believe that if management would take the initiative, there would be even fewer strikes than there are at present.

7.5 p.m.

Mr. Dan Jones: The objections we on this side of the Committee have to the Budget lie more in what it does not say than in what it says. It is not fair of hon. Gentlemen opposite to make the claim that we have called the Budget horrible names. That is not so. Indeed, there were several murmurings of approval during the pronouncements of the Chancellor of the Exchequer.
My first and main objection to the Budget concerns the old-age pensioners. I make no apology for referring to them, because hon. Gentlemen opposite are not fair in claiming that the cost of living has not increased substantially since 1958. I suggest humbly that they are missing the point, whether deliberately or otherwise. The fact is that a promise was made to the old-age pensioners in 1959, by our Prime Minister, both pre-election and post-election. He said without any qualification that, as the wealth of the country increased, their position would be reviewed. There is no doubt that we are in the position today that almost all sections of the community have been benefiting in one way or another, and that the old-age pensioners are still left in the rear. I hope I shall be forgiven for saying that I believe this to be a gross betrayal of people who may be in desperate need.
My second objection is that certain hon. Gentlemen opposite have attempted to claim that the Budget shows a Crippsian approach to our economic problems. I wish that were the case, because had it been so we would have heard from the Chancellor of certain tax concessions to people who are prepared to reinvest their profits in industry rather than to spread them out in dividends. That was what Cripps did, and I listened carefully to the right hon. Gentleman, hoping to hear something similar from him. The truth is that we are a manufacturing nation, and unless we re-equip industry in the way I am outlining, we shall be faced with serious difficulties.
I do not share the new and optimistic attitude towards the automobile industry. I do not claim to be an economist of note but, in my humble opinion, we are tending to put all our eggs in that one basket. I have seen certain districts which because they depended upon one industry, suffered very much when that industry met with a rebuff.
I was looking to the Chancellor for some measures which would take account of the fact that the Common Market will operate shortly and that we in the Outer Seven may be in a disadvantageous position. Certain precautions are very necessary in that connection. I will not emphasise that point too much, but I am by no means happy that our economy, which is largely geared to the automobile industry, is as safe as I would like it to be.
My last point concerns the trade unions. I was relieved to hear the hon. Gentleman the Member for Wembley, South (Mr. Russell) make some decent references to the trade union movement, because it is customary for hon. Gentlemen opposite, each time the opportunity presents itself, to castigate that great movement. In my view, this Committee should go on record as recognising that unofficial strikes, which conceivably do harm to our economy, are never created by the official trade union movement, and that in effect it is the trade union movement itself which settles these strikes. This Committee should say that in order to give encouragement to that much maligned movement to go on with its good work. I am not particularly impressed by the movie industry and its attitude to the trade union movement.


Neither was I much impressed by the films, "I'm All Right Jack" and "The Angry Silence".
When all is said and done, many strikes are caused not so much by the agents of foreign Powers, as was suggested by the hon. Gentleman opposite, as by people who probably left school at the age of 14, whose education has been limited, who have been reared in an acquisitive society, and, therefore, cannot be blamed for trying to get all they possibly can out of industry. Indeed, I once heard one of the hierarchy of the Conservative Party, Sir Anthony Eden, say in Cardiff that he did believe in workers getting all they could get out of industry. That was said during the pre election period. I do not think we can talk to those people in that way and expect them to behave with the statesmanship which we have a right to expect from others.
Finally, I take this opportunity to go on record as paying homage to the great work done by the trade union movement in the economic life of our country.

7.9 p.m.

Mr. Eric Johnson: The hon. Member for Burnley (Mr. D. Jones) will not expect me to follow him closely in what he said about the trade union movement. However, I hasten to assure him that he is mistaken if he supposes that anyone on this side of the Committee has any antagonism towards that most valuable and important movement in this country.
I have the greatest respect for what the leaders of the trade union movement do to maintain industrial peace. Occasionally I have the opportunity to talk to some of them, not as an industrialist but as a politician, and I realise the difficult problems they have to face. If I made one comment, it would be that if the leaders of the trade union movement could only get a larger percentage of their membership to attend branch meetings I believe that half the trouble we meet would not exist. I am certain that the British man wants to do fair work for fair wages under fair conditions.
One comment made today was that last year we had an election Budget and that this year we have a tough one. I cannot see that this is a particularly tough Budget. Last year it was necessary to

stimulate industrial investment, and very rightly my right hon. Friend thought that the only way to do it was by encouraging consumption. That was the main purpose of his Budget last year. Since then, notably towards the end of last year, there were disappointments in the balance of payments position, due, among other things, to a falling off of earnings in the shipping and oil industries. It was therefore clear that this year there was a need to moderate the rate of expansion. My right hon. Friend had to rule out the possibility of giving any increase in spending power, so there was no possibility of reductions in taxation on the lines urged on him by many of my hon. Friends and by many people in the country.
As always, my right hon. Friend made a lucid and, on this occasion, a very courageous speech, knowing that what he said would not be received with acclamation from this side of the Committee, nor throughout the country, but knowing that he was doing what he believed to be right, as we expect him to do. I do not think many people who thought seriously about the position could have expected much by way of reductions in taxation this year. Indeed, from many quarters, and in many economic journals, my right hon. Friend was advised that he ought to impose much more drastic increases in taxation than I am glad to see he has seen fit to do.
I hoped for three things only from the Budget, and I am glad that I received two of them. First, the abolition of entertainments tax on cinemas which, together with other hon. Members, I have urged for some time; secondly, a reduction in the duty on petrol and diesel oil; thirdly, a much more generous interpretation of hardship for repaying post-war credits. That enables me to speak for rather a shorter time than I had originally intended.
I welcome what my right hon. Friend said about savings. The increase in the amount which can be held is a wise move. I am pleased with what my right hon. Friend said he would do about Premium Bonds. I was fortunate enough to get a reasonable prize from that source in the early stages. I am glad that my right hon. Friend has increased the possibility of winning a larger prize.
My right hon. Friend's proposals to prevent the Inland Revenue being


cheated seemed to give great joy to the party opposite. Hon. Gentlemen seem to think that we are not equally pleased that something is to be done about this. It is wrong to suppose that the party opposite has a sort of monopoly, not only of wisdom, but of honesty and goodness. Hon. Members on this side of the Committee are as anxious as hon. Gentlemen opposite to see that there are no loopholes, and that any form of cheating that goes on is stopped.
I am glad that my right hon. Friend has at last succeeded in doing away with the Entertainments Tax on cinemas. It is good to see that the cinema industry has been increasing its oversea earnings recently, but that position depends on a strong home market, and I hope that the action which my right hon. Friend has taken has not come too late because last year the rate at which some of the cinemas had to close was appalling.
May I now deal with the concession for which I hoped but did not get, a reduction in the tax on petrol and diesel oil? I believe it was estimated that the tax would yield about £327 million during the current financial year, but it is worth remembering that road users, through the duty on licences and Purchase Tax, contribute an additional £270 million a year. My right hon. Friend said today that the motor licence duty would probably bring in an additional £5 million this year.
There are two good reasons for reducing this duty. First, as soon as the first cut has been made the amount of duty collected starts to rise again as the number of motor vehicles increases. If there were a reduction of 6d. in the tax on petrol and diesel oil, and there were an annual increase of 6·5 per cent. in the number of motor vehicle?, a rough calculation—and I am a poor mathematician—shows that by 1965 the yield from a tax of 2s. per gallon would be greater than it is at present with tax at 2s. 6d. per gallon. Taking a longer view than merely considering this year's revenue, there is a strong case for reducing the tax on the ground that it makes up quite rapidly what has been taken away in the initial stages.
Another point is that the cost of petrol and diesel oil affects the cost of road transport, which in turn affects the cost of virtually everything we use. If

that reduction were made and passed on in the form of lower prices, it would be of great help to the consumer. It would bring down the price of everything that we use. However, I would not altogether blame my right hon. Friend if he was not moved by that argument because of the poor response he has had from industry to his appeal to bring down prices.
I do not like the idea of differentiating between one class of road user and another, but I should draw attention to the position of my local authority in Manchester and its transport undertaking. It provides a public service and, as such, it has to accept the responsibilities of a public service and run un-remunerative services and maintain for use at peak periods a larger number of vehicles than would otherwise be justified.
It pays tax on petrol and diesel oil at the rate of £575,000 a year out of an income of £6 million from its buses. That is a heavy imposition. I have said that I do not believe in differentiating between one class of road user and another, but road users are discriminated against in the tax on petrol and diesel oil. Road transport users are the only people who pay tax on diesel oil. Tax is not paid on diesel oil used in stationary agricultural machinery, farm tractors, machinery for generating electricity and machinery for central heating. The British Transport Commission does not pay duty on the diesel oil it uses in its engines. I am not suggesting that those categories ought to pay tax. I am suggesting that road users ought to pay less tax than they pay now, because they pay a very heavy tax. I do not think that many hon. Members on either side of the Committee would argue that a tax of 200 per cent. on the most luxurious of luxuries was fair, but that is the present rate of tax on the basic supply price of diesel oil, and diesel oil is certainly no luxury.
I now want to make a few remarks about a subject on which I feel strongly, but I am not sure that many of my hon. Friends agree with me. I said that my right hon. Friend met with a poor response to his appeal to industry to reduce prices. I do not think anyone would deny that lower prices are of far more value to the community as a whole


than higher dividends, higher wages or higher pensions, and I believe, and have been saying in my humble way for a long time, that industry, and industry alone, must take the lead in bringing them down.
I do not suppose the speeches I make in the House are studied with close interest in the board rooms of Imperial Chemical Industries, Shell Transport or any other firm, and still less that the advice that I give them on those occasions is taken, but in the debate on the Budget Resolutions two years ago I drew attention to the first Report of the Cohen Committee which said, in effect, that it would be better to devote the benefits of greater technical efficiency and productivity to reducing prices rather than to passing on those benefits either in increased wages or in increased dividends. I have not seen much sign of the Cohen Committee's advice being taken even, though it has been repeated over and over again by my right hon. Friend.
To be fair to industry, there is something which has to be said. There are on record instances of increased costs of freights or raw materials being absorbed without any increase in prices. That is, in effect, a sort of hidden reduction. It must also be remembered that in reducing prices one has to take a very long-term view of the position. It would be, to put it mildly, most imprudent for a firm to rush in and start reducing its prices just because it happened to have had a good year and to be making a lot of money at that time. Caution in that respect is more important than ever at the present time when the whole future of British industry is almost in the balance depending on what effect the Common Market will have.
If it is wise to be cautious about rushing in to reduce one's prices, it is equally true that one should be cautious about increasing dividends. I believe, rightly Or wrongly, that greatly increased dividends are simply an invitation to organised labour to ask for increased wages. It would not be human nature if that were not so. Yet this year we have once again the spectacle of a number of large firms paying greatly increased dividends, unfortunately just about the time of the Budget.
I wonder whether the green light was not given to dividend increases two years ago when the rate of tax on distributed profits was reduced and on undistributed profits increased, from 30 per cent. to 10 per cent. in one case, and from 3 per cent. to 10 per cent. in the other. I know quite well that the Royal Commission recommended that the two rates of Profits Tax should be replaced by a single rate. I know also that there are many powerful arguments in favour of that recommendation. The Royal Commission said that the two rates of Profits Tax did not encourage companies so much to plough back profits as to retain them and that it would better serve the public interest that a company should be encouraged to distribute those profits which cannot be put to fruitful use.
All I can say is that the use which a company makes of its profits depends entirely on the character of the company. A company whose business is mainly merchanting and does not have to keep on renewing plant obviously does not need to plough back its profits, but many firms have to put down big, expensive plant to keep up to date—the steel industry is a case in point—and can do it only by ploughing back a very large proportion of their profits.
Since the change in Profits Tax was made, we have certainly found plenty of examples of the advice of the Royal Commission about the distribution of profits being taken. We have many examples of dividends being increased. It is much harder to find examples of price reduction. I would remind the Committee of paragraph 22 in Part I of this year's Economic Survey which says:
Profits are needed to provide for further expansion, as well as for a return on capital invested and they may also be effected by the expectation of higher costs; but they should not be allowed to gain so large a share of increased productivity that benefits cannot be spread to the consumer through the level of prices.
I believe that lower prices are particularly important at the present time, not only because of the benefit to the consumer, but because—these are also the words of the Economic Survey—
price stability reduces the pressure for wage increases.
So on those grounds I have no particular objection to the increase in Profits Tax. I would go so far as to say that a good many industrialists have


asked for it. The only regret I have about it is that my right hon. Friend did not put up the Profits Tax on distributed profits to 15 per cent. and cut the other one down to 5 per cent., which I think would have been a better arrangement.

The Financial Secretary to the Treasury (Sir Edward Boyle): My hon. Friend is making a most helpful speech, but might I put it to him that retaining the investment allowance while at the same time raising the rate of Profits Tax by 2½ per cent. will surely have something of the effect for which he has been agitating?

Mr. Johnson: I am sure that my hon. Friend is right on that point. I am glad that he has corrected me.

Mr. Cyril Osborne: In fairness to industry, would not my hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) agree that certain industries have either substantially reduced prices in the last three years or improved the quality of the goods which they are putting on the market while charging the same prices, which is, in effect, a reduction in prices? Secondly, would he not also agree that the reduction in prices or the improvement in quality has taken place in the industries in which there is competition?

Mr. Manuel: For instance?

Mr. Osborne: In my own industry. If the hon. Gentleman will go to my industry he will find examples.

The Temporary Chairman (Mr. W. R. Williams): This is now getting beyond an intervention.

Mr. Johnson: I agree with what my hon. Friend the Member for Louth (Mr. C. Osborne) said. I said, of course, that those industries had absorbed extra costs. He is perfectly right on the other points that he has mentioned. I do not want to be unfair to industry, but I was trying to back up what my right hon. Friend has been saying and what so many of us feel, that more ought really to be done to reduce prices than has been done. There are obviously good firms which have done their share and more than their share, but there are others which perhaps might have done a little more.
I want to turn to a subject which is troubling me as it is all hon. Members,

and that is the position of the older people who are worst off financially. In those I include the people referred to by my hon. and gallant Friend the Member for Worthing (Sir O. Prior-Palmer). I do not just mean old-age pensioners, because there are many people drawing the old-age pension who have other sources of income and are probably in better circumstances than those who have not a pension but are trying to live as best they can on savings. I fully accept what has been said by the Government, that it is their intention to continue to give those people a share in the increasing prosperity which wise economic policies will continue to bring about.
I know that less than six months have elapsed since the General Election when that promise was made, and, of course, the real value of the pension, as we must at all times remember when we are criticising the Government's pensions policy, is very much greater than it was when the Conservative Party came into office in 1951. Quite honestly, I think that is only to be expected; I should be very surprised if it were not so. It is a fact that retail prices have virtually remained steady since last October, and the cost of living index is the same as it was a year ago, but since last October there has been an increase of 1·5 per cent. in the index of wage rates and, as I have mentioned, we have had examples of increased dividends.

Mr. D. Jones: Would not the hon. Member for Manchester, Blackley (Mr. E. Johnson) agree that the position of the country today is very different from what it was in 1951, and, consequently, that the capacity to deal with these people must be equally different?

Mr. Johnson: In reply to that, I could not agree more; it is immensely different.
One of the problems which we have in Manchester in regard to house building is the demand for garages for the cars for people who are working for a weekly wage and living in new council housing estates. Many of them have asked me, "What is going to happen about a garage?" That is certainly something which did not occur even in 1951, and which I personally am very glad to see. But in my constituency I do not see many cars parked outside old people's bungalows and I do not think that many people


who are drawing supplementary pensions today are shareholders in I.C.I., Shell, or even the Savoy Hotel.
I hope that it will not be long, and I believe that it will not be long, before we get something a little more concrete for the old people as their share in the rising prosperity. My hon. Friend the Member for Wembley, South (Mr. Russell) said just now that all the time he had been in the House of Commons the Budget had never been used as an occasion for announcing pension increases. That is generally well known. I hope that we shall get something for them which is a little more concrete, although it is not very long since we had the General Election.

Mr. Tom Brown: I thank the hon. Member for giving way. He has just made a statement which is not accurate. A past Chancellor said in his Budget speech that taxation must be used to create greater social reforms, and, in particular, reform for the old people.

Mr. Johnson: That is not quite what I said. I said that the Budget was not used for introducing increases in pensions. However, I get the hon. Gentleman's point.
May I say, in conclusion, that what we need today is a steady increase in investment and production and we have to do that without damaging the stability of the currency or any risk to the balance of payments position. That depends on achieving at home the right balance between total demand and productive resources. We have to be very careful about costs and prices, and we have thereby to secure favourable circumstances for the export trade.
I believe that my right hon. Friend, in his courageous speech and courageous Budget, even if it is not a popular one, has struck just about the right measure, and I believe that these proposals will attain the end that he, and I am sure the whole Committee, have in view.

7.34 p.m.

Mr. John McCann: It is always a pleasure to follow the hon. Member for Manchester, Blackley (Mr. E. Johnson). I can assure him that, although he may not be listened to in the board rooms of I.C.I. and other places like that, he is listened to with particular

interest on this side of the Committee. The content of his speeches always lines up with the thoughts that we are putting forward. I sometimes wonder how he got on that side of the Committee and whether he was not left there when the change-over took place in 1951. He has followed the pattern of Government supporters right through this debate. They have damned the Budget with faint praise and then said that there are many things that they would like to have seen in it.
I am certain that quite a number of hon. Members on the Government benches are now concerned about the question of old-age pensions. I remember that when, from this side of the Committee, we tried to increase the old-age pension and, under the Ten Minutes Rule, debates took place with a view to bringing the plight of the old-age pensioners to the notice of the Chancellor of the Exchequer, hon. Members opposite solidly voted against us. This looks like the biggest mass conversion since a Chinese general baptised his army with a hosepipe. I hope that as the debate continues, and we press this matter of relief of distress of the old people, hon. Members opposite will live up to the statements which they have made and, if necessary, follow us into the Lobby.
I was rather interested to hear the praise in favour of Premium Bonds. I completely disagree with it, but I can imagine that when the hon. Member for Blackley won a fairly substantial prize in the early days sales in Blackley rocketed when the news became known. That might have been one of those devious advertising media which are used.
The hon. Member said that he had got three things out of the Budget. I have got two. The first is the satisfaction of knowing that the newspaper forecasts were wrong. They had been forecasting all kinds of dire things that the Chancellor would be inflicting on the country, particularly an increase in the cost of National Insurance stamps. I am rather pleased that that has not come about. I should not have expected it, because having followed the football forecasts in the papers for so long, I know how far from the mark they can continue to be. I have still to continue working after all the forecasts of the experts.
My next point—and this was a point raised by my right hon. Friend the Leader of the Opposition—is the satisfaction of knowing that our statements during the General Election—that a sunshine Budget is always followed by a hard Budget—have been proved correct. Let me quote what the Chancellor said in opening his Budget on 7th April last year:
The account I have to give to the Committee this afternoon is, I believe, an encouraging one, but the note I want to sound throughout is not one of satisfaction at past achievements but one of challenge to the opportunities that now confront us if we have the enterprise and the vigour to exploit them.
He went on to quote a Sunday newspaper as saying:
'… this is the springtime of opportunity, not a harvest of prosperity '."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 27.]
and he then proceeded to give away almost £400 million mainly to people in the higher income brackets.
The point which my right hon. Friend was trying to make was that, while accepting quite calmly now an increase of £360 million in the Estimates in one year, it is only six months ago, during the last election, that on the hoardings of Rochdale, in huge red, white and blue letters— I have not learnt the significance of the colour scheme of those posters—it was stated that Socialist schemes would cost £1,000 million and ruin the country.
That election was won because it was said that we would ruin the country by spending £1,000 million in five years. Now, less than six months after the election, we calmly accept the fact that £360 million is the normal yearly rise in the expenses of the country, and so, over five years, it will be £1,700 million.

Mr. E. Johnson: We are still £700 million to the good on that calculation.

Mr. McCann: Actually, the country is spending £1,700 million as against £1,000 million. I suppose that the moneylenders from whom we have to borrow will be £700 million to the good, but I am not altogether on their side. That is our supposed prosperity.
The Chancellor had a song in his heart, but today he had to tell us that hire-purchase debt had risen by £240 million during the year—£24 million in the last month—and was now running at about £847 million. The cars about

which the Chancellor has spoken are mostly bought on hire purchase, which is why garages are needed. The country is buying goods which it cannot afford, and that is not a suitable basis for prosperity. To paraphrase a famous term, this is "Never-never had it so good", because we are rapidly entering Never-never-land.
The most dangerous thing about this is the tremendous effect on real savings, because, in spite of the Chancellor's efforts to balance money paid now against savings, it is a fact that as hire-purchase arrangements become cumulative they are paid out of weekly income, so that savings are bound to suffer.
The increase in Post Office savings must not be viewed broadly. The figures must be broken down to get their true implication. It must be remembered that since the Chancellor's gesture of last year, or the year before, Post Office accounts have been opened for all people who own post-war credits. If those deposit accounts are to be counted as new savings in the Post Office, then, as the acceleration of post-war credits comes along, the Chancellor will get a shock.
I was interested in what the right hon. Gentleman said about encouraging people to invest savings in fairly high interest securities. I notice that he has raised the limit on holdings of National Savings to £900 and I suppose that interest will be tax-free. The limit on Defence Bonds is being raised to £5,000. Small investors can take no part in those and if money is withdrawn from low interest investments and invested in National Savings and Defence Bonds, no extra money will be available to the Government while they will have to pay extra interest.
I was rather amused by the announcement of the decrease of tax on playing cards. I suppose that the newspapers which tell fortunes will be interested in that. There was also the reduction of the tax on wine. I could not help thinking of the Chancellor's humour and his use of apt quotations. I am sure that the Chancellor would agree that if anyone wrote the history of his Budget speech it could be described, as Omar Khayyam would describe it, by saying, "A pack of cards, a glass of wine, and thou"—An HON. MEMBER: "Who is 'thou'?"] I do not know.
When I spoke in the Budget debate last year, I mentioned Entertainments Duty and expressed the view that the Chancellor should be bolder about helping the small cinema. He made some concessions which we criticised as being too little and too late, and the truth of that assertion has been borne out by numerous closures of small cinemas during the year. It must be recognised that changing habits have had much to do with this. People may prefer to stay at home and watch television during the winter, but even in this day and age there are still some who cannot afford television and for whom the small cinema is the only escape from economic reality.
While it is true that the cinema industry has been the arbiter of its own misfortune, with its high overheads, I hope that the day will never come when the only cinemas are huge cinemas showing Todd-AO like "Can-Can" and "South Pacific", which run for three or four months at a time and thus give no choice of film. At heart, I am a countryman and I believe that the small cinema has a place in the life of the community. More marriages have been arranged on the back rows of country cinemas than anywhere else, except on the back rows of buses on weekly outings.
I am rather worried about the Income Tax allowance for P.A.Y.E. earners in respect of contributions made for graduated pensions. I recognise the difficulty when it is not known exactly what contribution will be paid, but it is altogether wrong that we should have an arbitrary figure of £15, unless there is to be an adjustment at the end of the year. Will the man who does not pay a contribution be allowed a £15 allowance against his Income Tax while the man at the other end of the scale gets an allowance of £50? The man who tends to lose, whenever an average or mean is struck, is the man who cannot afford to pay.
I congratulate the Chancellor on his move towards removing the anomaly of post-war credits. He has done a magnificent job and the very people who need it most are the people who are to get it. I see that those proposals are to cost £9 million and I was rather intrigued to find that the estimate for what was spent last year was £25 million less than was expected. Perhaps during the course of

the Finance Bill we can ask the Chancellor to use some of that £25 million in other ways. If he cannot use it to help with post-war credits, perhaps he can use it for widows with children, or to help to remove the "10s. anomaly", which I would like to see go.
The increase in the Tobacco Duty can cause only alarm and despondency among the people in the lower income brackets, because they are the only section of the community being attacked. I do not smoke, so the proposal does not affect me Since coming to the House of Commons, I have put on weight so rapidly that I decided to start smoking, but I shall not do so now. I have decided to give my lungs a rest. [Laughter]. I said my lungs, not my larynx.
Last year's arguments about tobacco tokens are still valid. There are many people who, in the evening of their days, find tremendous consolation in a pipe or cigarette, and I hope that in the course of our debates we shall be able to reintroduce something like the tobacco token to make sure that the already pitifully low old-age pension is not further eroded. I recognise that pensions are not a matter for the Budget, but I also recognise that if the money which would otherwise be available is given away in the Budget there is no chance of increasing pensions later. It is always better to keep a little in reserve for that purpose.
The National Assistance Board is doing a magnificent job, but if the basic rates of pension were increased the Board would be relieved of much of the work which it now has to do. May I cite a personal experience? A month ago, in Rochdale, a man came to me who had a basic pension, with 3s. 6d. or 3s. 9d. supplementary. He lives on his own. He had the misfortune to lose one of his pay cheques. The Assistance Board gave him back much of that money, but, because of the bad weather, he ran into debt for his coal and owed 39s. He came to see me and I wrote to the Board about it. The Board's officials went to see the man and paid for the coal he had bought and made him an allowance which is the equivalent of one extra bag of coal a fortnight until the warm weather comes. That was a magnificent gesture, but I feel that if we paid a decent basic rate, many such


people would be able to manage without having to go to the Assistance Board.

Mr. E. Johnson: Does not the hon. Member think that there is something to be said for the view that if the rate of pension is increased it will benefit all and sundry, whether people want it or not? Is it not better to give rather more, through the Assistance Board, to people who need it most, rather than giving extra money to those who do not need it?

The Temporary Chairman: I am sorry to have to interrupt the debate, but we are now going a little wide of the subject.

Mr. McCann: I take it that that means that I cannot answer the question.
I want for a few moments to deal with rates. Rates are a poll tax which fall most heavily on people who cannot afford them. Much has been said about the matter before. I feel that too much of what should be national expenditure is put on the shoulders of local authorities by virtue of high interest rates. If he wants to stabilise the economy the Chancellor should study this matter very closely.
The right hon. Gentleman was proud of the increase in the building of houses for rent and talked about a property-owning democracy, but he failed to argue that the level of building of corporation houses is sinking to an all-time low. When one goes to one's constituency and sees the shocking conditions in which people are living, one does not mind who builds the houses—whether private builders or the corporation—as long as people can afford to live in them. I should like to see more done so that local authorities could afford to build decent houses. This is not a question of whether the country can afford to do it, but whether it can afford not to do it.
Tomorrow, I expect to see in the newspapers the country's reaction to this Budget. I do not think that it will be very favourable, but at least we have to be thankful that more has not been done to us. The country would be interested in this Resolution:
That, as from the fourth day of August, nineteen hundred and sixty, a mechanical lighter shall be defined for the purposes of the customs and excise duties as any portable contrivance intended to provide a means of ignition, whether by spark or flame or otherwise, being a mechanical, chemical, electrical or similar contrivance.
I shall continue to call it a lighter.

7.51 p.m.

Mr. Percy Browne: I do not intend to follow the hon. Member for Rochdale (Mr. McCann) in all the party points which he made, but we on this side of the House can reply to his jibe about the £1,000 million to be spent by the Labour Party and the £360 million that we have spent by saying that we have spent this money but, at the same time, have kept the cost of living and the economy stable. That is something to be proud of. What the country was afraid of last autumn was that if the Labour Party were in power, the spending of that money would result in inflation.
I do not want to keep on making party points, but having done so, I would say some things about the Budget itself. There seems to be some misunderstanding about the duty on heavy wines. I believe that my right hon. Friend the Chancellor of the Exchequer said that he disliked having to lower this tax during the Budget and that it did not work in with the rest of his concessions, but that it was a result of the Outer Seven agreement and he had promised Portugal, which is included in the Outer Seven, that he would reduce it.
I am sure that all hon. Members in the Committee welcomes the increase in the dependants' allowance of £15 a year and the new allowance for widows and widowers who have children and who draw the children's allowance. I join with the hon. Member for Rochdale in welcoming the widening of the qualifications for post-war credits, and also in his delight at seeing the abolition of the cinema tax. I, too, live in a rural area and I am delighted to see the end of that tax.
There are two or three things not in the Budget which I would have liked to have seen included. The first concerns rural transport. I do not believe that we want a subsidy for rural transport. We shall soon arrive at the time when everybody subsidises everybody else, but if we could have a reduction in petrol tax for minibuses or small buses, then I believe we could cope with the rural transport problem. That concession is long overdue.
I also hoped that we might hear of some provision—although perhaps this is not a subject for a Budget—so that the


Treasury could relax the ridiculous rules whereby if somebody wants to install electricity, and the electricity board has the equipment and is able to do it, the Treasury does not allow it.
I come now to pensions. You, Mr. Williams, called an hon. Member to order because he was getting a little wide of the mark, but this problem has been talked about a great deal in the debate and I shall make a short comment that I would rather have made during the pensions debate last month but, owing to its curtailment, was not able to do so.
I cannot agree that we have fulfilled our election pledge that we would allow pensioners to enjoy the rising prosperity of this country. I do not say this to get applause from the other side of the House, but because I really believe it. Since the election four things have happened—there have been large capital gains, an increase in wages, an increase in Government spending, and—say what one will—a slight increase in the cost of living.
I understand that the Budget is not the right time to propose to increase retirement pensions, but in the part of the country I come from, where wages are low, I can assure you, Mr. Williams, that there are many people who are in dire straits today. I would not suggest, as my hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) did, that the basic pension should be increased just like that. I feel that the principle of concentrating help where it is most needed is the right one, but could we not do it as a two-tiered pension system?

The Temporary Chairman: I hope that the hon. Member will not make the speech that he intended to make on another subject. We are now on the Budget.

Mr. Browne: I am sorry, Mr. Williams. I shall say no more about that, except that I hope that we can do something whereby we can help many old-age pensioners.
There has been a suggestion that dividends should be curtailed. But I believe that for good labour relations—and I entirely agree with what my hon. Friend said about management being basically responsible for this—it would help if

dividends could be declared as a percentage of the value of the share at the time that dividend is declared and not as a percentage of the par value of it.
It is a pity that we should take 2d. off beer one year and put 2d. on tobacco the next. Although there are things that I wished to see in the Budget, there are other things I might have liked, as a farmer, to have seen left out. This one thing rankled and seemed out of place, and I very much regret that the Chancellor could not see fit to leave it out.

7.59 p.m.

Mr. John Rankin: The Budget presented me with some very interesting contrasts. First of all there was the spectacle, which has become all-too-familiar in recent years, of the Tory Party stealing the pants of the Labour Party. In three of the main issues on which the Chancellor reduced taxes, this side of the Committee has, in face of opposition from the Government, consistently urged that, first, we should get after tax dodgers, secondly, that we should abolish the cinema tax, and, thirdly, that we ought to extend post-war credits. It is not unfair to say that over the nine years during which the battle on the issue of abolition of cinema tax has been fought we have found time and again that the Government supporters were quite prepared to go into the Lobby on the issue of abolition, not just reduction, which we put forward.
There is the other aspect of the Budget, the picture that was built up by the Chancellor, which was bound to create a feeling of confidence. The fact that the feeling of confidence was very strong on the Government side was evidenced by the reaction produced at certain stages in the speech of the Chancellor when he made his proposals. To me they appeared somewhat tepid and over-tinted with caution. For some strange reason they did not reveal the spirit of rollicking adventure which informed the pre-election Budget of the right hon. Gentleman.
It is worth noting some of the things the right hon. Gentleman said. He said that we had no unused resources now. I would say on that that he was rather badly informed, because in Scotland, as we were telling the world no later than Saturday of last week, there is an overabundance of unused resources. He said


that his hopes regarding unemployment have been realised. If the hopes of the right hon. Gentleman have been realised in parts of the United Kingdom, I can tell him that they have not been realised in Scotland.
He said that exports were rising and that our main customers were prosperous. Purchasing power at home had increased. Consumption and fixed investments were all good. Output per head had increased and there was a large rise in production. Demand was generally sound. It must be agreed that a picture of that nature when contemplated by the country, as it will be tomorrow, is bound to create hopes, but there will be disappointment later on when people realise that those hopes have not been realised.
The Chancellor went out of his way to emphasise the need to increase exports, and with that we all agree. Either we increase exports or we die. The right hon. Gentleman warned us against overloading the economy because it might endanger price stability on which to some extent we depend. At that stage in his speech I wondered how much Scotland is paying for the price of stability and how far her unemployed force is being maintained to fill the gaps in the economy in other parts of the United Kingdom.
With that picture in mind we contemplate the unemployed rate of 19 per cent. referred to in the Economic Survey and remember that in Scotland there is still a figure of 4·3 per cent. With 20 per cent. of the total unemployed in Britain today, we have the highest rate of unemployment in any part of the country, with the result that there is a drift away from Scotland which in the long run is bound to do a great deal of harm to the country. It is producing the result that, if we take account of certain other factors, the Scottish net loss by emigration is higher than the net loss of the whole of the United Kingdom.
If, despite the picture which he painted today, the Chancellor does not regard the Scottish position as serious and requiring special attention, the conference of all parties, including independents, which was held last Saturday in Glasgow certainly takes that view. Very soon there will be elected representatives from both sides of the House and from all parties saying to the Prime

Minister the things which I am saying now. If the general position of the United Kingdom is as happy as the Chancellor said this afternoon, we in Scotland should not be carrying 91,000 unemployed, which represents part of those unused resources still available in my country but which, again according to the Chancellor, have disappeared from other parts of the United Kingdom.
In common with other hon. Members who have spoken in this debate, I am sorry that there has not been even a kindly word spoken for the old-age pensioners. It has been said that in the Budget we can do nothing for the pensioner. But as was said by my hon. Friend the Member for Ince (Mr. T. Brown), it has been done before, and as was said by my hon. Friend the Member for Rochdale (Mr. McCann), it is in the Budget that we are gathering the resources which we shall use during the coming year. I suggest that there should have been some indication in the speech of the Chancellor so that the old folks will know what are the intentions of the Government in this respect.
Nothing has been done for them since January, 1958, over two years ago. What was done on that occasion benefited only a small fraction, about 1 million out of nearly 5 million. The great majority of old folks in receipt of pensions went unaided. At that time 4½ million did not get even a bean. It is wrong to say that most of them have superannuation benefits because, as has been pointed out, though some of them, like the railway superannuitants, have pensions, they are very small. We are constantly reminded by those retired railway servants that their position is very insecure. We must remember that, apart from those who have super-annuitant benefits, there is the great mass—we can only guess at the number —who are only keeping body and soul together with the help which they receive from kindly relatives and other sympathetic people.
Having said that, I wish now to congratulate the right hon. Gentleman on some of the things he has done. First, the abolition of the cinema tax. My hon. Friend the Member for Ince and the hon. Member for Totnes (Mr. Mawby), as well as other hon. Members, have in recent years fought for at least


a reduction in the tax, if not its abolition. It is a matter which has been debated for a long time, and the abolition of this tax will shorten many speeches, perhaps my own among them. Nevertheless, I welcome the action of the Chancellor.
The cinema industry is now free to work out its own salvation no longer encumbered by interference from the State, and I wish it success in the process. I also welcome the intimation that something is to be given to doctors and dentists. I hope I followed that point exactly from what the Chancellor said. I think doctors particularly deserve some help. I hope that when the Government study the Report and reach a decision they will apply the recommendations of the Pilkington Committee in full.
As I have already indicated, I welcome the fact that the Chancellor is going after the tax dodgers. It was rather regrettable to find that long list of people whom a Tory Chancellor is now nominating in the House of Commons as people who have to be watched. I did not realise that there were so many potential criminals in the country, but when the Tories begin to get after them that shows how necessary it has been to do so over the many years when we were saying it should be done but when nothing was happening. Nevertheless, it is better late than never. While the Chancellor was speaking, the article written by Mr. Andrew Shonfleld a week ago yesterday came to my mind. I wondered why the Chancellor did not propose to widen the scope of his research into (the activities of these people to deal with the groups who were pinpointed by Mr. Shonfield.
In that interesting article, dealing with tax returns for 1957–58, the Observer showed that 115,000 incorporated businesses earned less than £250 a year. These, said Mr. Shonfield, represent only half of all such businesses in the country and tax returns show that the average net income per company is £31. How they are living is a mystery. I assume that the Government must be carrying a heavier load of national assistance than we imagined. That may be one reason why they cannot give more to the old folks as they are already giving so much, for all we know, to this class of people.
We are told in that article that there are nearly 1½ million people in trade and in the professions presumably living on their earnings. Nearly a third of them had a net true income of less than £250 per year. The average for this group worked out at £120 per head. No wonder people often say that one half of this nation does not know how the other half is living. Once again, perhaps, it would be well if the Chancellor began to inquire more closely into how that particular half is living at the moment.
Another third, numbering 484,000, declared incomes of between £250 and £500 a year. How they manage to run big cars on those incomes is a mystery which, of course, inquiries might solve. The average income is £300. The people who are making these small profits, if we call them so, out of these businesses are the people who are the pioneers and professors of the system on which the country depends, the system of private enterprise which, on the returns made to the Income Tax authorities, is not providing them with a living at all. Why their number never seems to grow less is a mystery. If that last group declared on average an income no greater than that of the average adult manual worker in Britain, the Exchequer would benefit, to the amount of between £30 million and £40 million. These were figures quoted in a responsible newspaper. If they are wrong, I should imagine that in the course of the debate we shall hear them challenged.

Sir E. Boyle: Yes, hon. Members will.

Mr. Rankin: I am glad to have that promise. I should imagine that the ensuing debate will prove very interesting. Perhaps there might be a challenge to the figures which have been published in regard to death duties. Mr. Shonfield draws attention to the curious fact that, whilst the national income has increased by 80 per cent. in money terms over the last ten years, the yield of tax from death duties is slightly less today than it was ten years ago. I take it that these figures are also to be challenged. Perhaps the way in which the allowance for new capital investment works out in some cases will also be challenged, because we are told that a business man buying a car for £1,000 is able to knock off as much as £550 from his taxable income in the year of purchase since capital


allowances amount to as much as 55 per cent. I wonder whether there is any truth in the figures that have been submitted? Whether or not there is truth in them, I hope the Financial Secretary will convey to his right hon. Friend that perhaps a different practice might be used in future in regard to many of the expenses allowed in business.

Sir E. Boyle: May I interrupt the hon. Member, as he has quoted Mr. Shonfield's article at some length? These are tricky subjects. No one respects Mr. Shonfield more than I do. I know him well, but we cannot compare death duties of today with the days when the tax was very much lower. Under the present Government the yield on Estate Duty has risen from about £150 million in the tax year 1952–53 to an estimated £227 million for the forthcoming year, which does not suggest very much evasion.

Mr. Rankin: I am not for a moment suggesting that there is not a defence. It would be rather strange if there were not and if there were not also explanations, but there is no doubt that much suspicion has been cast on this question. As a matter of fact, the Chancellor has verified today many of the suspicions which have been cast on that group of the community which comprehensively was called "the tax dodging group." The Chancellor has agreed that they exist. It is difficult to argue how far they extend and whether the other evasions to which Mr. Shonfield's article points should be tackled, but the hon. Member is well aware that, as these matters have come up in the Budget, they will be debated more fully in Committee.
I suggest that in that respect and in respect of such questions as expenses and the running of motor cars, which we have raised repeatedly, he should think of the suggestion which has been made that there should be a ceiling figure on motoring and entertainment expenses—a figure which is related to income. The individual who feels that he has an injustice can then state his case and try to prove it.
I am sure that there could be considerable recruitment to the national income along the lines which have been suggested. Money is passing the Exchequer either by hook or by crook—and I am

making no allegations. The one person who cannot get away with very much is the ordinary working man—and the Member of Parliament, at least on this side of the Committee. We are all taxed before we get our money. That is true of a great section of the professional community and true almost wholly of the working-class community.
It creates a tremendous disbalance of attitude within the nation when large sections of people feel that others are able in some way or another wrongly to avoid obligations which the ordinary person must always face. He does not object to paying, but he feels that others are not paying their full whack or making their proper contribution to meet the needs of the country from the income which they are earning. If they were making their proper contribution the Chancellor might have been able to tell us today that, from the extra income which this would have brought, he could pay the old-age pensioners far more than we are paying them now.

8.23 p.m.

Mr. Kenneth Lewis: I do not propose to follow the arguments of the hon. Member for Glasgow, Govan (Mr. Rankin) except to say that it is always a pleasure to listen to him and that if this Budget had not been as mild as it is it might have been even more interesting to hear his speech.
I doubt whether there has ever been a Budget the reasonable standstill proposals of which have been more generally forecast than on this occasion. I have no doubt that in the circumstances the Chancellor and the prophets are right. The Chancellor has followed the example of the pigeon and has given us very few eggs for Easter. I have always believed that taxation can be too high. Equally, I have always believed that taxation can be too low. It is too high now. It was too low before the war. I do not believe that we have yet achieved a balance. It is too high now not because of anything which the Chancellor has done or is doing, but because Government Departments are spending too much of the money which people themselves should be spending.
I do not believe that we shall get large or even reasonable cuts in Government expenditure unless we change policy. This is where I disagree with some of my


hon. Friends. However much we probe Government expenditure within present policies, I do not think that we shall make a great impact with economies.
There are three groups of Government expenditure which I would always support whole-heartedly: first, expenditure which is necessary for the defence of the nation; secondly, expenditure which is necessary, as it sometimes becomes necessary, to prime the pump to create employment; and, thirdly, expenditure which takes the form of Government assistance to those members of the community who are very much worse off than are most of us.
Before the war, unemployment was very high in this country. It was high partly because of world conditions but also, in my view, because the Government spent too little and taxed too little. They were over-cautious in priming the pump to create work. If I may say so, right hon. and hon. Gentlemen opposite or their predecessors lamentably failed to use public finance in those days to stimulate the economy. In Jarrow, where I was born, where I was brought up and where I spent my youth, unemployment rose from 32 per cent. too 80 per cent. when the Labour Party was in office. I and a great many others were considerably affected by that. Unemployment in the North-East of England, Scotland and elsewhere may be high today, but it is nothing like as high as it was in those days.

Mr. Marsh: This is a fascinating exercise. Is the hon. Member seriously trying to prove that during the period of mass unemployment before Che war the Labour Party were the Government of the country, with power?

Mr. Lewis: I am at an age which enables me to remember those days. The Labour Party got out of office and handed over to a Government which obtained an enormous majority, a majority which they retained at the 1935 General Election because the public did not believe that the Labour Party's promises were sensible of operation.

Mr. T. Brown: Is not the hon. Member aware that before the war there was a Coalition Government, so that neither party was to blame?

Mr. Lewis: I am surprised to hear the hon. Member say that. As I understand the history of those times, the party opposite was never very agreeably disposed towards those of its right hon. and hon. Members on the Front Bench who crossed the Floor of the House and joined that Coalition Government.
Clearly, there is no need today for the Government to prime the pump, but I wish that in his Budget proposals my right hon. Friend had been able to make a tax change which would have encouraged private industry to go to those places where unemployment today is still higher than it is in general throughout the country. I believe that this would not have been really using Government money, but using money taken from the profits of industry, exercising some form of tax discrimination, which we already have in other directions, to ensure that industry is more equitably distributed throughout the country.
However, it is only too clear that what we have today is a new kind of priming of the pump. We have it at a time when it is not necessary. We have a priming of the pump through the nationalised industries. The £90 million which the Chancellor of the Exchequer is taking from below the line and putting above the line is simply a means of making the taxpayer foot the bill for the losses of British Railways. This has been handed down to this side of the Committee from right hon. and hon. Gentlemen opposite. It was they who nationalised the railways. The railways represent one of the peaks, one of the so-called commanding heights of the economy. It is a retracting, out of date, and loss-making industry, and the taxpayer is saddled with this loss. The commanding height has become a sombre depth to the taxpayer.
The policy of taking over these so-called commanding heights will always lead us into this kind of loss. The Labour Party said at the last election —presumably, it will say it at the next election—"We intend to take over steel because it is a commanding height, because it is a peak". [HON. MEMBERS: "Hear, hear."] I do not know why hon. Gentlemen opposite say "Hear, hear". How do they know that the commanding height of steel today will not be a sombre depth ten or fifteen years afterwards, in the same way as


the railways are today? How do they know that plastics, for example, will not take the place of steel as a major industry? When they define "commanding heights", where does it stop? How many commanding heights, how many peaks, are there?
I have said that I believe that in a time of unemployment the taxpayer is justified, through the Exchequer, in priming the pump. Today we have full employment. The Prime Minister said a week or two ago—I paraphrase it, because I have not his exact words— "It ill becomes those who have always had plenty to criticise the many who have now got it good". I agree with that. I have seen too much of the depression not to do so. However, when people earn good wages, when they have money to spend and when, on top of the money they have to spend, they also have money on hand to save, I believe that the Government should confine their largesse to those who are less well off and that they should allow, and, indeed, persuade, the prosperous populace to decide for itself what it wants to spend its reserves of cash on.
This afternoon, the Chancellor of the Exchequer said, when referring to the Civil Estimates—and again I paraphrase —"If people want these things, we must give them to them". He was justifying a rise of £247 million net in civil expenditure. Must we give them to them, or should we let them buy these things for themselves. The reason why a rise in old-age pensions cannot be justified is that so much money is going out in all sorts of other directions to people who are quite well off and able to buy these things for themselves. To give welfare to those who do not need it is simply wet nursing the nation. It strikes at the roots of responsibility and moral fibre. It ordains that men can still waste and not want. That is a wholly deplorable doctrine—

Dr. King: The hon. Gentleman has referred to the Chancellor's speech. The two major items of expenditure that the right hon. Gentleman justified were education and health. Does the hon. Gentleman regard providing education for children and care for sick people as wet nursing them?

Mr. Lewis: I was about to come to that point when the Bon. Gentleman

intervened. I think that the House of Commons will be faced with a very large increase in expenditure on education. I have already said that I do not regard looking after the sick and the old people who are less well off as something that should not be done. Indeed, it should be done.
The Health Service Estimates have gone up and up over the years. Hon. Members had the same experience when in office, and had to take action. They had to put on the prescription charges and increase the weekly contributions. We are faced with exactly the same dilemma. Year after year there is a constant demand for increases, and nobody can say that these requests for increased expenditure are not justified. We need new hospitals. There is a great demand for geriatric places. Mental health work will require a lot of money.
All I ask is how we are to finance it? Are we to go on financing it from an increasing Budget? We will never be able to reduce taxation, to give people more of their own money back if we do. In the long run, what we have to do is to define what the Government will spend on the Health Service, for those who are less well off and who really need it. Then we have to encourage another service alongside that, for which the people themselves will pay, and decide whether or not they want it.
That can be done quite acceptably through insurance schemes in industry, and so on. In fact, I believe that one of the ways in which we can make the link between employer and worker more effective than it is today, or than it has been for a year or two, is, in some way, to encourage the employer to do the same for health and welfare generally as, in two years' time, he will be encouraged to set up his own pension scheme.
In a situation in which the Government provide the climate and stimulate the economy to give work, we have to look again at Government expenditure on the Civil Estimates—the Estimates made available for the mass of the people. That seems to be good Conservative doctrine. We look after those who need our assistance, and to the rest we say, "We provide you with work.


We encourage you to earn as much as industry will produce. We expect you to make up your own mind whether you want to spend your spare money on things that are available in the shops, or whether you are prepared to contribute a certain amount of your money to making provision for your old age, for periods of sickness and for things of that sort."
These are the great matters of policy that have to be decided. Examining Government expenditure as it is, in detail, under present policies, can save very little. Only by relating the Civil Estimates to the affluent society in which we live can we achieve any increases in savings, or any considerable reduction in Government expenditure.

8.40 p.m.

Mr. John Mackie: This is my first Budget debate. What has interested me most has been the faces of hon. Members opposite during the Chancellor's speech. They were most revealing. Hon. Members opposite are obviously not in agreement among themselves. The hon. Member for Wembley, South (Mr. Russell) assured us that, although hon. Members opposite could not be heard cheering above our cheers, they were cheering loudly, but the hon. Member for Manchester, Blackley (Mr. E. Johnson) said that he was sorry that the acclamation for the Budget was not very great. It is evident that there is not much agreement among hon. Members opposite. One point that they made constantly was that they were not expecting much. There is a saying, "Blessed are they who are not expecting much, for they will not be disappointed". We can, therefore, assume that hon. Members opposite are not too disappointed.
The hon. Member for Rutland and Stamford (Mr. K. Lewis) will forgive me if I do not follow all his arguments, but I wish to correct him on the subject of Labour Governments before the war. There never was a Labour Government before 1945 which could have carried out the measures necessary to put the country on its feet. The arguments we have had about National Governments carry no weight at all in this matter. I was surprised to hear some hon. Members opposite admit that pensions require some improvement. The hon. Member for Rutland and Stamford made that

point, but his main argument was that we must cut down Government expenditure. I thought that he was going to tell us exactly how to do it, but he was very vague in that respect.
I disagree with many of my hon. Friends about the extra tax on tobacco. Most of us have spoken on the subject of the disease which smoking creates, and I feel that anything which helps to prevent people smoking should be welcomed. I would not vote against such a measure. There are plenty of other taxes that we could vote against. It has been said that the Chancellor said that his reduction in duties in respect of certain wines was made to suit the wishes of the Seven, and that he had promised to deal with this question. I was under the impression that he had said that this step was to bring the tax on heavy wines and certain sparkling wines into a still better relationship with that on light wines. As the main wine that he is dealing with in this connection is port, and as the sparkling wine concerned is champagne, I should have thought it better to reimpose the duty that he took off a year or two ago, because people who drink wine can afford to pay this duty.
I welcome very much the change which the Chancellor proposes in taxes on farming. I welcome any effort to get people to pay what taxes they are due to pay, because I personally pay all my taxes and the more evasiveness that goes on the more I have to pay. My biggest creditor at the moment is Her Majesty. However, I think that the Chancellor is going to give the inspectors a very difficult job in differentiating exactly between what is a genuine farming business and what is only a hobby business attached to some other business. I think that they can do it, but I think it will be a very big and difficult job indeed. I certainly hope that they will be successful.
I am not sure I agree with the Chancellor's proposals to grade death duties, but I think that that, combined with his other proposal which will affect hobby farming, will help to reduce the price of land, by reducing the tremendous demand for land, particularly around towns, for farms both large and small. It should be a help because, of course, with this grading of death duties there will not be the demand to buy land which attracts 35 per cent. of Estate Duty. It


should help genuine farmers to get land, instead of hobby farmers.
I come now to the question of preventing what is called tax evasion, which is a nice thing to call it. One of my hon. Friends when talking about this said that it was cheating. I should not like to go as far as to say that it is cheating. After all, it is all done within the existing law, and I doubt whether there is anyone, whether he is a wage earner or the director of a big company, who will not take any legal way there may be of not paying more tax than he can help. I really should not like to call it cheating, and I think that the expression "tax evasion" is a very much better one.
However, I think it is a very bad thing that today it is often considered in business to be more important to have a good chartered accountant than a good manager. It is quite amazing the amount of effort which goes into finding out what different ways there are to avoid tax. It is almost a business in itself nowadays, and when it comes to a chartered accountant being more important than a production manager, I think things have come to a bad pass. After all, as the Chancellor said, production is the only criterion of real new wealth, and we must never forget that.
While I am talking about that, I will take up the question of the continual appeals over the last few years to people to lower prices. It is just no use appealing. Appeals of that description can never have any effect. People just do not believe in them. I think the Chancellor should take a leaf out of the book of the Minister of Agriculture, who sees that in farming we jolly well get our prices cut whether we like it or not. I do not know how the Chancellor will proceed on those lines, but some other method besides that of appealing must be found if he wants results.
My last point is the one which everyone on this side of the Committee has been making, the situation of the old people. There is nothing for them in this Budget. The point has been made that, of course, the question of old-age pensions does not need to be dealt with in the Budget, but, as one of my hon. Friends has said, it has to be allowed for in the general picture of the Budget whether it is dealt with in the Budget or not, and the argument that the Budget

is not the place to deal with pensions does not seem to me to be very much of an argument. As it is, the question of the old people was not even mentioned at all in it.
I am perfectly certain that most people would have accepted any tax to give the old people some hope of some share in the prosperity most of us have today. I would, anyway. A tremendous number of the old people in my constituency come to my weekly meetings as regularly as can be, and they tell me dreadful stories of their hard-upness and their struggle to manage on what they are allowed.
I was shocked when at Question time today the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance made out that it was only a very small percentage whose pensions have to be supplemented. If one belongs to that small percentage it does not by any means seem so small a matter as she tried to make it. I am absolutely sick of the argument, as is everyone on this side of the Committee, which makes comparisons between circumstances as they were in 1951 and as they are today. The argument, is whether the pension is enough now. One can see from Question time today and from speeches on both sides of the Committee that it obviously is not enough. In that case it should be made enough, and at an early date.

8.50 p.m.

Sir Douglas Glover: I rise to support my right hon. Friend the Chancellor in his Budget and to welcome particularly the removal of the duty from the entertainments industry. The Committee will remember that last year I made a rather colourful speech and I talked about extracting blood from the bleeding body on the battlefield, which I thought was a very apt description of the cinema industry and particularly of the smaller cinemas at that time. I therefore warmly welcome the fact that the duty is to be removed. If I were on the Opposition benches no doubt I should support the plea of hon. Members opposite for an increase in old-age pensions.

Dr. King: Come over.

Sir D. Glover: The hon. Member should wait until I have finished.
It is perfectly natural for any opposition to take this line. It appeals to the deepest human emotions, and hon. Members opposite know that I say this with as much sincerity as they do. But when one has responsibility for government one unfortunately cannot let human emotions take quite as much control as when one is in opposition. The Government and the Chancellor have to consider the fact that the burden which will fall on the shoulders of those who follow afterwards year by year during the rest of this century will be very heavy indeed.
The hon. Member for Enfield, East (Mr. Mackie) thought that the word "cheating" was the wrong word for tax avoidance. I think that that is true. I would say that the general attitude of most of the British public today is that whether one pays at the lower rate of 2s. 3d. in the £, or at the highest rate of Surtax, which I think is 17s. 6d. in the £, it is a national pastime not to pay more tax than the State is legally entitled to have. I do not call that tax avoidance, but the intelligent manipulation of one's income. One does not want to pay a penny more than the State, by its legislation, has given itself the right to exact.
This is one reason why I am sorry that nothing has been done about the Schedule A tax. The injustice of the Schedule A tax is that those who have benefited from the Conservative educational programme are sufficiently sharp witted to realise that they can claim all of it against repair allowances, while the poor widow living in a bungalow pays the full rate of Schedule A because she is not sufficiently up to what she can claim. It is for that reason that I hope that at the earliest opportunity Schedule A tax will be removed.
I do not think that the tax is an injustice in itself. The lawyers' argument for Schedule A tax is valid, but its injustice is that it operates against those least able to bear it and operates against something which is even more valuable— the declared aim of the Conservative Party to bring about a property-owning democracy. It is for these reasons that I should like to see it removed.
I accept, however, that the Chancellor, in approaching the Budget, was faced with the difficult problem of whether the

economy was advancing faster than the speed of the road would allow. I do not have very much sympathy with those on both sides of the Committee who argue and get so cross about whether we are moving in fits and starts. Of course, any economy, poised as ours is, depending largely on its export target and results, must inevitably be like a car on the road. At one moment it is quite right for the Government driver, the Chancellor of the Exchequer, to put his foot hard on the accelerator, as my right hon. Friend did in the Budget last year.
Then, the car having gained momentum, it is good, sound driving, if there is a corner ahead, to put the brakes on, preferably gently, because if you put them on in good time you will not be taking all the treads off the tyres—

Mr. Douglas Houghton: With the General Election in between.

Sir D. Glover: You are the last person to make such a remark, because you are so well-versed in the balance of our economy that you know that what happened in the Budget last year was thoroughly justified, and that what is happening in the Budget this year—

The Deputy-Chairman (Major Sir William Anstruther-Gray): Order. I hope that the hon. Member will remember that when he says "you", he is referring to the occupant of the Chair.

Sir D. Glover: I apologise to you, Sir William. I am sure you know that I intended no disrespect to the Chair. It was due to the excitement of answering the hon. Member for Sowerby (Mr. Houghton), who had got under my skin because he knew perfectly well that what he was saying was not justified.
To return to my argument, I support the Chancellor in his decision that this year the Budget should be largely a standstill Budget. However, there is one proposal at which I shall look with great interest when we reach the Finance Bill. I support the hon. Gentleman the Member for Enfield, East (Mr. Mackie) in his desire to stop loss farming, tax avoidance and the other things which the Chancellor desires to catch in the Budget, but I believe that we in this Committee have an obligation to the people of this country to produce laws which are intelligible to the ordinary person in the street.
I am becoming increasingly disturbed about the amount of legislation which reads, "If, in the opinion of …" The hon. Gentleman is very knowledgeable in these matters and I am sure that he would agree that commissioners sitting in one part of the country might reach an entirely different conclusion on the same evidence from another group of commissioners sitting in another part of the country. In other words, under the laws which we make here people who are not lawyers have the power to decide whether somebody has broken the taxation laws. In my opinion, we should make sure that legislation passed by this House is drawn so tightly that the people who have to work within the tramlines of that legislation can understand it easily.
I am sufficient of a democrat to admit that if I were asked whether I would accept a minor degree of tax avoidance in order to ensure the freedom of the individual, I would prefer to accept a small degree of tax avoidance and protect the freedom of the individual rather than allow administration by diktat to grow, as it could so easily grow over a period of years if we, the guardians of the individual in this country, do not watch carefully what we are doing. If we allow a system to develop whereby such decisions rest in the hands of people outside the House of Commons who are not answerable to the courts of law, it will not be many years before this is extended beyond our taxation system. I believe that our greatest task here is to watch the freedom of the individual.
I should have liked to have heard from the Chancellor about the development of the Commonwealth and the Colonies. Just before Christmas I was fortunate to go as one of the Commonwealth Parliamentary delegates to the conference in Australia. Despite all the devisions of view about the great problem of colour —and let us not avoid the issue—I was impressed by the enormous bond of belief in the future of the British Commonwealth. I am sure that as the years go by that belief will not expand and grow unless there is far more contact and growth between Parliamentarians of this House, of the fully grown Dominions, and the developing Colonies.
We were fortunate enough to go to Fiji. I think that we were the first Parliamentarians to go to the island for

twelve years. It was the first time that the people of that island realised that this Mother of Parliaments was still interested in the future of Fiji. Perhaps after the Chancellor's sound administration there will be a surplus to dispose of in next year's Budget. I suggest to my right hon. Friend that we ought to have far more funds available, either to the Commonwealth Parliamentary Association, or to a committee administered by back benchers, to allow hon. Members of this ancient House to go to the Dominions and Colonies, not always with an official delegation, but as individuals to find out things for themselves.
At this time we are devoting our time and our thoughts to the problem of developing countries in Africa. How many hon. Members know and understand the problems of that country? How can we reach a decision formed on our own knowledge and judgment? Surely it is not too much to suggest that in the years ahead we should see that hon. Members get the opportunity to go to these countries to find out their problems, and, more important, to build up that bond of friendship and understanding without which—and let us be quite certain about this—the Commonwealth cannot grow and prosper. I hope that my right hon. Friend will bring that point to the attention of my right hon. Friend.
In general, I support the Budget. I realise that it will bring disappointment to some, but it is soundly based. It is right that at this time the brakes should be put on, and that we should not rush to create the conditions for another bout of inflation that we put right two years ago. The measures which the Chancellor has brought in will just about achieve the equilibrium that we all desire to see maintained. From that, we shall build up that further progress for Britain's economy during the next twelve months without which we cannot help the Commonwealth, the world, or ourselves.

9.4 p.m.

Mr. Charles Loughlin: I listened to most of the debate until I left the Chamber to have a meal. Since my return I have listened to three speeches. The most significant thing about all the speeches is the very small amount of time which has been spent


on the Chancellor's proposals. That underlines the type of Budget presented to us this afternoon. A previous Budget has been described as "a mouse of a Budget". This Budget can be described only as "a wee replica of a mouse of a Budget", because it contains so little that is of social significance to the community.
It has been argued that the Budget is not the instrument in which to detail proposals for improvement of social services for either old-age pensioners or anyone else. However, I should have thought that, traditionally, the Budget is an instrument by which there can be some redistribution of the national wealth. I feel that it is the responsibility of the Chancellor so to garner the resources of the country as to make provision for the social services which it is necessary to put into effect. But the Chancellor has seen fit to take no account at all of the parlous state of the old-age pensioners, the sick, the unemployed, the infirm and those people who are living to a large extent upon fixed incomes. He has done nothing whatever to make provision to give those sections of the community even the hope of an improvement in their standard of living.
If it is true that we have an affluent society, and if wages have gone up in the last year by 4 per cent. and dividends by 10 per cent., it is reasonable to assume that this society can afford to make provision in a Budget to ensure that the standard of living of the people who have very little is made comparable with that of the rest of the society.
Reference has already been made to old-age pensions in relation to the cost of living. I submit that if we argue that pensions can rise only in relation to increases in the cost of living, what we are arguing is for the status quo in the Standard of living of pensioners irrespective of any increase in national wealth, and that is not a valid argument at all.
The Chancellor made some references in his Budget statement to future prospects and said that we cannot expect the very favourable terms of trade that we have enjoyed in the last two years to remain indefinitely. The question of what were the causes of the affluent con-

ditions that we have had since 1951 has constantly been raised in the debate, and it is answered by those words uttered by the right hon. Gentleman. The stabilisation of prices is not something of which the Government ought to be proud. It is something of which the Government ought to be ashamed, because how they have managed, with all the appeals to industry, to create a situation in which we have been able to purchase primary products at enormously cheaper prices while we have at the same time merely kept prices stable, I do not know. It is no credit to the Government that prices have been stabilised over the last 18 months. When prices in world markets increased at the time of Korea the Labour Government were condemned for increasing the cost of living. If the argument applied in that respect, it applies equally when prices in world markets decline.
The Chancellor went on to talk about the possibility of other steps being taken in the near future to augment the slight increase in the Bank Rate in January of this year. There was also a reference to the suggestion that there ought to be more stabilisation of wage claims. Are we now, then, leaving this period of affluent society? Does the Chancellor believe that we are entering a period when it will be necessary to impose greater restraint upon the economy of this country? Are we beginning again the policy that the Government pursued before, which culminated in 1957 in, if the true figures were known, some 850,000 unemployed? Have the Government reached the position when they are frightened again of the expanding economy which we have had in the last 18 months? I am asking these questions because I think that it is only fair to the country that it should know now what to expect.
After all, the election is over. If we can take past experience, I should not be surprised if the Government were now going to enter upon a new phase of economic repression, of holding back production. If they hold back production in this country it will be the most fatal thing that they can do, particularly at this stage.
One of the things that British industry has failed to do—and it is germane to the debate and perhaps its most


important aspect—is to expand productivity to the degree that it ought to have done by the use of mechanisation. If we are now to enter on a phase of credit squeezes of one kind or another in industry, then we shall be left behind in the race which is going on at the present time and which is being intensified, as the Prime Minister said only a few days ago, by the various units within Europe. There has been some increase in productivity, but it is not reflected in prices or re-investment in British industry. If the Chancellor means that the Government are to reimpose some form of credit squeeze, we are in for a sorry time. I hope that those questions will be answered.
We welcome the Government's proposals to tighten up measures to prevent tax evasion. We should not think in terms so much of taxation loss and the amount which might be used for improving social services. This is a moral issue. The hon. Member for Ormskirk (Sir D. Glover) said that it was quite legitimate to use any expedient not to pay.

Sir D. Glover: I am sure that the hon. Member does not want to misquote me. I did not say "use any expedient". I said that any member of the taxation public had a right to study the law and to say, "This is permitted and, therefore, I will not pay tax upon it".

Mr. Loughlin: I accept what the hon. Member has said. I deliberately provoked him into giving me the clarification I required.
The idea that all things are possible within the law is not a good moral philosophy. What happens is that there arises a class of people who are prepared to use loopholes in the law for their own gains, at the expense of the community. Those who pay P.A.Y.E. have always paid it, and although we feel annoyed that we have to pay, in the ultimate we accept our social responsibilities. I welcome the measures which the Chancellor has announced, and I only hope that the chartered accountants, who usually manage to find the methods by which the law can be manipulated to their ends, do not find additional methods.

Sir D. Glover: The 'hon. Member is using a good deal of my speech on which

to build his own. I do not want to be misunderstood about anything I said. I said that I supported the Chancellor's proposals but that what I was disturbed about was that it was partly the responsibility of the Committee to see that our legislation could be easily understood by the ordinary citizen and was not in the amorphous expression—" if in the opinion of somebody else."

Mr. Loughlin: I do not want to pursue that argument. I was delighted to give way to the hon. Member because I did not want to be unfair to him, but other hon. Members want to speak.
There may be a legitimate case for the decrease in the wine duty, but it is ironical that old-age pensioners will have to pay an extra 2d. on each packet of cigarettes they buy while someone may be drinking a glass of champagne which will now cost less than it did. I ask the Chancellor to examine the suggestion which has already been made, that if it is necessary to increase the Tobacco Duty by 2d. on a packet of cigarettes, old-age pensioners should have their concession restored so that they can have a smoke at reduced rates. Incidentally, we who smoke cigarettes—and I hope that my hon. Friends who disapprove will allow me to contract cancer of my own free will—are already paying more Chan enough in Tobacco Duty. The increase means that the average fellow in a factory will have to pay again, as he has had to pay time and again in successive Budgets.
Finally, let me put a point to the hon. Member for Ilford, South (Mr. Cooper) who gave advice to the trade union movement about strike action. He evidenced by his statement that he had little knowledge either of British industry, of the trade union movement, or why thirty or forty people can put thousands of others out of work. The "wildcat" strike by thirty or forty people has nothing to do with the wholesale dispensing of labour. That is because of the recent development in British industry whereby a major producing factory uses all the other factories as pantries for spare parts. It is as simple as that.
The trade union movement can be proud, on the basis of the Government's own figures, of the contribution it has made towards harmony in industry, and


of the fact that this country loses fewer days by strike action than most other countries in the world.

9.22 p.m.

Mr. William Clark: It is always difficult to reconcile relief in taxation with increased Government expenditure, and I accept the fact that in the delicate economic situation, and in view of our balance of payments problems, we have not very much room for manoeuvre in this Budget, despite the fact that the outturn this year has been a deficit of £314 million as against an estimated deficit of £700-odd million—in fact, an upturn of some £400 million.
I accept, as I believe the Committee does, that the greatest scourge of the modern world, particularly this country, is inflation, and that we must do everything we can to avoid inflation, because the keynote of all finance must be a stable £. If this cautionary Budget, coupled with the reductions that may be made in credit, or with an adjustment in Bank Rate, can achieve stabilisation of the £, then we are on the right lines.
The estimate for the coming year is an overall deficit of just over £300 million. There are, of course, many claims for relief of taxation, such as Schedule A and Surtax, but if there is no room for manoeuvre in this cautionary Budget then these claims have to be deferred. There is, however, one section of taxation on which the Committee should spend more time, and that is the taxation on capital or Estate Duty.
The Chancellor collected £226 million in Estate Duty last year and this duty has to be above the line in the Budget, which means that it is available for day-to-day expenditure of the Government. This tax, which is on capital, on wealth that has been built up either by a family or by an individual, is, in fact, on the wealth of the nation, and yet we are using it as day-to-day expenditure.
I am not arguing about the social justification for this redistribution of wealth, and I am not arguing that there should not be a duty. I am arguing that Estate Duty should not necessarily be above the line but should go where it belongs, which is below the line, so that we put this tax on capital in the capital section of the budgetary finance.
As I am sure the Committee would agree, Estate Duty is extremely onerous on small businesses which employ, shall we say, 200 or 250 people—I refer to the small family businesses throughout the country. I do not think I need exaggerate or emphasise the importance of these businesses which employ over half of the working population and in which labour relations are extremely good. I am grieved that the tax on the capital value of such businesses is collected by the Government and put into the above-line. Were it put below the line it would be available for investment, and what better way to invest it than to re-lend it to the businesses from which it has been collected?
Hon. Members can quote cases from their own knowledge to prove the onerous nature of this tax. It has to be paid immediately before probate is granted for the estate, and in many cases that results in the break-up of the business and a severance of the continuity of the family connection. Were the Chancellor to put this money below the line, it would be available for re-investment. No better purpose could be found for the money than to invest it in the small businesses which produced it and allow them to pay the duty, at a proper rate of interest, over a period of ten, fifteen or twenty years. That would ensure that the businesses were not broken up because of the incidence of Estate Duty.
It would cost the Chancellor nothing, unless the rates were altered, but if my right hon. Friend feels he cannot reduce the rates, it would cost nothing. The estimate for next year would be precisely the same. We lend public money to the nationalised boards, why should we not lend money to small businesses? I ask my hon. Friend to bring to the notice of the Chancellor the hardship suffered by small business men resulting from the incidence of Estate Duty.
One welcomes the small reliefs which have been given in the Budget particularly in relation to gifts made inter vivos. One imagines that there might be a more equitable way of dealing with the matter, including reducing the tax by 20 per cent. each year, because under the present proposal there will still exist the anomaly that after two years the tax will still have to be paid, but if death occurs after a period of two years and a day, relief will be given.
The Committee will agree that any relief in taxation is, by and large, inflationary. Any such reduction must increase the consumer demand. That is not the case with Estate Duty, which is not an inflationary tax. Any relief would not necessarily mean that the beneficiaries would immediately squander the money. I urge the Chancellor to consider that there is a way in which he could help small businesses which contribute largely to our balance of payments and to our exports. If the Estate Duty cannot be reduced, let us at least provide an opportunity to pay it over a longer period. That would not cost the Exchequer anything, it would merely mean that the collection would be deferred, but it would ensure that we are not dissipating the wealth of the country by using capital for day-to-day expenditure.

9.30 p.m.

Mr. Tom Brown: Before referring to the Chancellor's Budget statement, I want to make one or two comments on the speech of the hon. Member for Ormskirk (Sir D. Glover). The hon. Member made an appeal to the Chancellor to have a higher regard for the Commonwealth nations. With that, I wholeheartedly agree. He said that there should be a greater bond of friendship and affection for people in the underdeveloped countries and in the Commonwealth countries. I believe, and always have believed, that that is right.
If we have to carry these people with us—as we have—in our administration there will have to be a stronger bond of friendship between this nation and Parliament and the Commonwealth nations. Secondly, he said that each right hon. and hon. Member of the House has a responsibility. I wholeheartedly agree with that. I believe that individual responsibility is the cornerstone of democracy. If we fail to realise our individual responsibility the edifice of democracy will tumble down on top of us.
Having agreed with the hon. Member on those points, I now make reference to the Budget. I agree that, like the curate's egg, the Budget is good in parts. I want to refer both to the good and the bad parts. I welcome the statement of the Chancellor about the abolition of Entertainments Duty. We have been

advocating abolition of that duty for many years. Now we find that the Chancellor and the Treasury—or should I say the Treasury supported by the Chancellor?—have agreed to recommend the complete abolition of Entertainments Duty. It is long overdue. A great deal of harm has been done while that tax was in operation. Its abolition has come, but it has come too late. I am not saying that Entertainments Duty is responsible for the dwindling of the numbers of people attending the cinemas, but it has played an important pact in that in the early days of the decline. Therefore, I compliment the Chancellor on finally abolishing it.
I welcome the statement of the Chancellor on the concessions to those in possession of post-war credits. How long have we on this side of the Committee and hon. Members opposite been advocating that there should be some easement in the repayment of post-war credits? Right from the days of Sir Kingsley Wood, who instituted post-war credits, there has been advocacy on the part of those who possessed them that it should be made easy for them to receive their payment. The Chancellor has done one thing in making the concession with which I am delighted. It will prevent a lot of anxiety which possessors of post-war credits have experienced over a number of years. I refer to the unfortunate disabled men and women. There are not many disabled women. Mostly they are disabled men, suffering long periods of unemployment, having sustained industrial accidents, and long periods of misfortune.
I am glad that the right hon. Gentleman has fixed a precise period of 26 weeks. Hitherto, we have had to put forward the argument, "It is a hard case", and it has been extremely difficult both for hon. Members and for those responsible to define what were hard cases. I am, therefore, glad that the Chancellor has fixed a precise period of 26 weeks, which will give us an opportunity of stating exactly who are the people who should receive the repayment of their post-war credits, now long overdue.
What are the bad parts of the Budget? A bad part, in my opinion, is the increase in the Tobacco Duty. Having


regard to the fact that he has lifted part of the tax on heavy wines, I think that the Chancellor has made a very serious mistake in putting an additional tax on those who smoke. I am not referring to the younger or middle-aged men, but to the hardship which will be endured by the old-age pensioner. Many right hon. and hon. Members know the trouble to which we went over the tobacco tokens during what we called the Dalton period. We went to a lot of trouble to ease the burden upon old-age pensioners who desired to smoke.
This may not be generally understood, but I want to impress upon right hon. and hon. Members that if there is one joy—if I may call it a joy—or one consolation given to an old-aged pensioner, a man or a woman, it is that of enjoying a smoke at the cheapest possible rate. By increasing the duty on tobacco, which automatically means an increase of 2d. in the price of a packet of cigarettes, the Chancellor has done a great disservice to the old folk, and I hope that in the Finance Bill he will have second thoughts on this vital question. I know that some people say, "If they do not want to pay the tax they should not buy the cigarettes" But that is not the way to look at it, and it is not the way I look at it.
The hon. Member for Ormskirk reminded us that we have a responsibility. It is part of our responsibility to try to make these old people as happy and comfortable as possible in the eventide of their lives. I hope that the Chancellor will reconsider the matter before he finally decides that he must impose a higher duty on tobacco.
I do not want to detain the Committee for more than a few minutes. Much has been said about what should be done for the old folk. There have been pleas from both sides of the Committee that in our administration of the finances of the country we should have high regard for the old folk. The Government must bear in mind that on 10th March last year, before the election, they had a wonderful opportunity of lending a helping hand to the hardest pressed section of the community—the old folks. They were stubborn and stupid—and I use that phrase with all respect.
The hon. Member for Birmingham, Yardley (Mr. Cleaver) may shake his

head, but I was on the Committee which dealt with the situation, and the attitude adopted during seven hours of that debate was such that it disturbed me more than I had previously been disturbed since I came to the House. The Government had an opportunity on 10th March, 1959 to do what they had promised to do during the General Election and in the Gracious Speech.
All these things upset and aggravate the old folks. Why were 48 Questions on the Order Paper today addressed to the Minister of Pensions and National Insurance? Why did so many right hon. and hon. Members table Questions? It was because of the dire need of the old folks. I regret very much that the Chancellor of the Exchequer has not seen fit to provide for some assistance to be given to them. On 16th March, I submitted evidence which proved conclusively—it has not been contradicted— that the old-age pensioner on the present basic rate of £2 10s., or £4 for a married couple, is 1s. 6d. "in the red" every week.

Mr. Leonard Cleaver: The hon. Gentleman says that old-age pensioners are hard done by now. What was the position in 1951, when the Labour Party was in power, and the buying power of the pension was 10s. 3d. less?

Mr. Brown: The new National Insurance Act, which comes into operation in 1961, provides for a pension based upon contributions paid by the workers. Every one of them will have to be earning between £9 and £15 a week.

Mr. Cleaver: Mr. Cleaver rose—

r. Brown: I have not time to give way again.
I plead again for justice for the old folks, as I have done so often in the past and will continue to do in the future. This nation is in duty and honour bound to give concessions to the old folks. They richly deserve those concessions. They have toiled and made sacrifices for them by their devotion and their mode of life. They are the veterans of industry, who have worked devotedly for the welfare of the country. Once the nation has seen to it that the old folks are properly cared for, it will be on the high road to success. I go back to what the hon. Member for Ormskirk said. Until we do that we shall fail in our duty.

Mr. Cleaver: Mr. Cleaver rose—

Mr. Brown: I am sorry, but I am trying to hurry through my remarks.
I appeal to the Chancellor of the Exchequer—I hope that he responds to it —to make some provision for the old folks in the course of the Finance Bill, They richly deserve it. I was disturbed today that hon. Members seemed to indicate—wrongly, of course—that there is no connection between pensions and the Exchequer. There is. That was admitted by a former Chancellor of the Exchequer, who did so much for social reform and whose name will live for ever. He laid it down finally that there should not only be a responsibility by the contributions paid by industrial workers. He said that, in addition to their contributions, a financial responsibility should rest on the Exchequer to supplement the income or revenue which bore the pension rates.
I hope that the Chancellor has not said his final word on the Tobacco Duty. This evening's newspapers say that the right hon. Gentleman is taking the responsibility off the rich and putting it on the poor; taking it from the wine drinker and putting it on the smoker. There are more smokers than there are wine drinkers. We should lift the existing burden from the old folks and put it on the shoulders that can bear it better. Let the Chancellor take heed of the hardship that this impost will cause to those already overburdened.

9.47 p.m.

Mr. Richard Marsh: A number of very complimentary references to the trade union movement have been made in this debate. This is an important factor, because what prosperity we have in the coming year will rely to a very large extent upon agreement between employers and employees to maintain a state of equilibrium in industry. This Budget, and our present financial position is so delicately balanced that unless we can achieve that state there are likely to be very serious effects.
It is not enough, however, nowadays, merely to say that we expect employers to pull together and trade unions to pull together. Now that employees have become so powerful, through their organisations, and now that internal wages and expenditure represent such an important part in the Budget and in

the financial aspect of the year, there is a very real need, and it should be possible to forecast to a greater degree than hitherto possible fluctuations in wage rates and wage costs. With that in mind, I hope that in the forthcoming year further consideration will be given to the possibility of long-term wage agreements so that Chancellors, industry and unions can forecast fluctuations with some degree of accuracy.
Many of my hon. Friends are far from happy with this Budget. I myself had not expected a land flowing with milk and honey. I had not expected massive tax concessions. But it has been suggested that many hon. Members opposite were returned at the last General Election because they gave the impression that this was a land of milk and honey —based, before that campaign, on the assumption that this country was healthy economically and was tearing its way to prosperity.
In the last Budget we had a repetition of what we have had in other pre-election Budgets. I believe it was the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) who said only a couple of weeks ago, quite openly, that the 1955 Budget was a classic electioneering Budget, which was not only dishonest but dangerous to the country's well-being. There is little doubt that last year's Budget was also—the hon. Member for Clapham (Dr. A. Glyn) shakes his head; I am glad to see that he has a conscience.
I have little doubt that last year's Budget was also a purely electioneering one. During the General Election, we on this side said that the country's prosperity was not based as firmly as hon. Members opposite would have the nation believe. We said that there was a need for a much higher rate of industrial investment, and that prosperity, such as it was, was based on a dangerously narrow margin. That, apparently, did not worry hon. Members opposite. Our balances were run down to enable them to obtain party capital—and I give them credit for their electioneering ability. Immediately after the General Election we begin to pay the price for their activities prior to it.
The Government followed that course in 1955 and produced a crisis that summer. It was followed by three years


of industrial stagnation. Last October we were told that we were on the crest of an economic wave of prosperity, but hon. Members opposite are already beginning to wonder whether life is really so prosperous as it was at the last General Election. No Government which plays ducks and drakes with our economic potentialities for electioneering purposes have very much to be proud of.
I do not suggest that we should spend large sums of money upon tax concessions. I do not suggest that we can give away large sums of money on anything else—although old-age pensions—

Mr. Percy Browne: What does the hon. Member suggest?

Mr. Marsh: —although old-age pensions are an entirely separate issue. I do not agree that we can give away large sums of money, because I do not believe that this country is in a sufficiently safe financial position for us to be able to do so. The situation which we face at present is far from happy.

Mr. Leonard Cleaver: Does the hon. Member agree that there is now no fear that we are likely to devalue the £? Will he explain why his party had to do it when it was in power?

Mr. Marsh: My party had to devalue the £ because factors turned against us. A large part of my case against the Budget is that the previous financial policy of the Government has been such that if the terms of trade went against us again we would have no manoeuvre-ability—no room in which to retract.

Mr. Cleaver: Does not the hon. Member agree that it was the pace at which his Government spent money that encouraged inflation? If they had gone more carefully they would not have had to do it.

Mr. Marsh: The hon. Member has obviously not spent his time wisely in reading the Economic Survey, because that states that this Government are spending, every year, more than the Labour Government did. If he suggests that conditions in 1947—two years after the end of the biggest war in history—are directly comparable with conditions in 1960—after nine years of Conservative Government—I do not think

much of his economics or reasoning. World conditions are continually and rapidly changing.
West German competition will be a serious threat to this country in years to come. They have achieved their present position as a result of high investment and rigid internal control of demand. I understand that German-French investment rates were up 20 per cent. last year, whereas we were rather happy that ours rose by 7 per cent. There is an even more serious factor. Reports are being received, which are giving rise to a certain amount of worry, that the Soviet Union is now likely to become an increasingly serious competitor of ours in the fields in which we have achieved an increase in exports—which is the only way we can maintain any stability— namely, motor vehicles and engineering, the two fields most vulnerable to foreign competition.
I do not know whether I shall remain popular with some of my hon. Friends in saying this, but my contention is that we are faced with a situation which is becoming increasingly serious and threatening to our people. We have had an increase in domestic consumption, and that is something we all want, but I cannot believe that it is very good national housekeeping when we have achieved that by the deliberate encouragement to a hire purchase debt approaching £900 million. I am by no means happy about the situation, and I think that to encourage this nation to believe that it can spend masses of money and live on "tick", as it has been doing in recent years, in the face of growing and serious foreign competition, is no service to this country by hon. Members opposite. Indeed, I sometimes feel worried that I shall finish by winning the support of the hon. Member for Kidderminster (Mr. Nabarro) and the noble Lord the hon. Member for Dorset, South.
The Chancellor hopes that having set this Frankenstein going he can now control it. It is going to be a lot more difficult to control the increase in hire purchase than it was to start the increase in hire purchase. For all these reasons I am very doubtful whether he will be able to do it.
The Chancellor in his speech said that last year we were glad to see an expansion of credit which made a notable


contribution to our policy of stimulating the economy, and he said that he now judged that we had reached a stage where we ought to be cautious about further extension of credit. I agree that he has woken up, but he has woken up a little late in the day. I am convinced that hon. Members and the Chancellor, too, could have foreseen the danger, when they started giving free rein in their pre-General Election Budget.
The problem is that the Budget is based and the financial policy of the Government is based upon the assumption that the terms of trade will stay in our favour the whole time. I do not believe that that is a very safe assumption to make, particularly in the light of changing circumstances. There will be times when the terms of trade will turn against us, and in the present situation we have no economic slack whatsoever. I believe it is a very serious problem. Indeed, the rising unemployment in 1958 was a clear result of the drop in exports and the consequent fall of production in this country.
I want to make one final point on the question of the old-age pensioners, as I said I would. I said I did not believe that these were in the normal run of Budget provisions, but the old-age pensioners are now in a position of sheer tragedy. I do not think it solves the matter to have these silly arguments about who was responsible for that. The fact is that there are several millions of our people who are living in conditions which are a disgrace to a civilised community. This is not a party propaganda point. There is real suffering in a great degree among very many of our people, who have done nothing worse than to get old. That is their only sin against society. I think several hon. Members opposite have

shown real appreciation of this problem. I only wish that they had shown that appreciation by voting with us on occasions in the past—

Mr. Osborne: Mr. Osborne rose—

Mr. Marsh: I cannot give way because there is only a very short space of time left to me.
Although one does not expect the Chancellor to give a clear declaration of policy in relation to the old-age pensioners in his Budget speech, there appears to be no provision in the Budget for ensuring the financial provision which would be necessary to meet the major expenditure which an increase in the pensions would require. It is perfectly true that he can still do it at a later date, but we on this side of the Committee feel, and I think that some hon. Members opposite are with us, that the position now has arisen where we have as a Parliament to ensure that those people have an increase virtually now. There is no argument which can be put up against that, because it is not really a question for an argument: it is a necessity.

Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again— [Mr. Bryan]—put and agreed to.

Report of Resolutions to be received Tomorrow.

Committee also report Progress; to sit again Tomorrow.

ADJOURNMENT

Resolved, That this House do now adjourn.—[Mr. Bryan.]

Adjourned accordingly at Ten o'clock.